A federal court in the US has ruled last year’s auction of 3G mobile licences – the largest ever – illegal. The licences, originally held by NextWave Telecom, were sold to 13 other mobile phone companies by the Federal Communications Commission following NextWave’s bankrupty filing. Following the court’s decision, the 13 companies are seeking the return of their $3.1 billion downpayment for the licences from the FCC.
Following the court’s decision, the 13 companies are seeking the return of their $3.1 billion downpayment for the licences from the FCC.
NextWave had held the 3G licences, but following its declaration as bankrupt, the FCC reclaimed them and auctioned them off. In November of last year, a $16 billion settlement was reached between Verizon Wireless, NextWave and the FCC, whereby NewWave was set to receive $6 billion. Since then, a federal court has ruled that the auctions were in fact illegal as the FCC was not in position to strip NewWave of the licences.
Verizon Wireless, which was looking to expand its bandwidth rapidly in order to add customers in major US cities, is leading the court proceedings following its ‘purchase’ of the 3G licences last year. It has also been argued that the sale of the licences was improper anyway, as NewWave had only paid $500 million for the licences in the first place.
It seems that unless the companies enter into negotiations, a prospect which is now unlikely, the question of ownership of the licences will only be resolved following lengthy court hearings. Unfortunately, this could leave the spectrum out of use for months.