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FCC Overruled by Supreme CourtMay, 2003 January 27 was a red-letter day for James Madsen, MBA '89. That is when the U.S. Supreme Court handed a victory to NextWave Telecom (www.nextwavetel.com), the wireless firm Madsen co-founded in 1995. NextWave had been locked in a 5-year legal battle with the Federal Communications Commission, which tried to repossess spectrum licenses covering 175 million Americans. NextWave had acquired the licenses in 1997 for a bid of $4.7 billion in FCC auctions. The federal agency established 10-year installment payments for the licenses, and NextWave had made all required payments when it filed for Chapter 11 bankruptcy protection in 1998. The FCC twice blocked NextWave's reorganization plans and instead seized the licenses and re-auctioned them for more than $16 billion in January 2001. In January 2003, the Supreme Court ruled 8-1 that federal bankruptcy law protects the company's assets from seizure by regulatory agencies, just as the law protects the assets of companies in bankruptcy from ordinary creditors. FCC Chairman Michael Powell was quoted as saying the decision brought much needed certainty to the law. For Madsen, vindication was a long time in coming, and a more personal version of the Business School course Business and the Changing Environment. About that class, he said, "I learned on an intellectual level how the government can be a significant influence on your business, but I never dreamt how huge they could be." But, he adds, "The old adages 'persistence pays,' 'stay focused on your long-term goal,' and 'never give up if you believe you are right' are corny but true." The company, where he is senior vice president for strategy, hopes to be the first in the United States to offer what is called 3G CDMA broadband mobile Internet service, with up to 2 megabits per second, metropolitan-area-wide wireless access to data through mobile devices. A silver lining of the court case, he said, is that technology has advanced since the original business plan he wrote for NextWave. |
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