Nextel has agreed to acquire the high-speed Internet wireless assets of bankrupt WorldCom for $144 million in cash, besting a bid by BellSouth, according to a court filing made on Monday.
WorldCom, once the No. 2 U.S. long-distance telephone carrier, paid about $1 billion for the wireless assets at the height of the Internet boom in 1999, through the acquisition of other companies.
BellSouth, a partner in Cingular Wireless with SBC Communications, had offered $65 million but the deal was subject to better offers at an auction held last week. The BellSouth transaction included acquiring WorldCom’s wireless licenses, network equipment and leases, as well as the assumption of contracts and site and tower leases.
One source familiar with the situation said the bidding last week for the airwaves lasted 24 straight hours before Nextel prevailed.
WorldCom acquired MMDS licenses at 2.5 GHz, for deploying high-speed wireless Internet access service in 13 markets, including Minneapolis, Kansas City, Missouri, and other markets in the southeastern United States.
WorldCom filed for bankruptcy in July 2002 after an $11 billion accounting scandal. They hope to emerge from bankruptcy later this year after shedding most of its $41 billion in debt.
In addition to approval from the bankruptcy court, the Federal Communications Commission would have to sign off on the transfer of the licenses to Nextel.
Spint and Worldcom owned about two thirds of the MMDS licenses in the United States, each owning about one third of the total. That leaves the other shoe - Sprint. Sprint, which has money problems of its own, has been keeping its MMDS plans close to its vest.
A 2.5 GHz, MMDS band standard (like 802.16a/e or 802.20) may have several advantages for delivering “wireless DSL”. They include lower equipment cost with “commodity” gear, protected licensed frequencies, higher power, non line of sight without a truck roll, cellular-like range, 1 Mbps speeds and (with 802.16e), mobility with voice and data handoff. The downside of 802.16a is that there are so many flavors to choose from. The market could take a while to gravitate around a few interoperable implementations.
Nextel has trialed Flarion gear. Now, with MMDS licenses in their pocket, and a 802.20 mobile high-speed data standard boring down like a freight train, Nextel COULD get on-board “4G” big time.
Cellular operators (and wire-line carriers) may have missed it “by that much”.
The train just left the station.
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