The Supreme Court will decide in a case argued Tuesday whether the government
has the power to reclaim spectrum licenses from a financially troubled company.
NextWave Communications had won a nearly $4.7 billion bid in 1996 for
lucrative radio-spectrum licenses the company intended for high-speed Internet
and wireless voice communication, conditional on full and timely payment. But
NextWave filed for bankruptcy in 1998, having paid only 10 percent.
Attorney Paul D. Clement, representing the Federal Communications Commission,
told the justices NextWave was not providing services to customers that
others stood ready to provide.
Reports said Justices David Souter and John Paul Stevens questioned whether
the government had made a regulatory move or an economic one, since the
government sold the recovered licenses for three times the $4.7 billion paid by
NextWave. Justices also questioned whether the FCC should be both creditor and
regulator, and whether there could have been a settlement.
Justices said they were aware that their decision could impact the ability of
the government to recapture licenses held by companies in financial difficulty.
Representing NextWave creditors, attorney Laurence Tribe cautioned that
investors were less likely to finance some ventures if it were easy for the
government to yank valuable licenses. A decision is expected this
term.
