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July 19, 2006

Clearwire's legal woes

Posted by Tricia Duryee at 9:58 AM

VentureWire reported today that Clearwire's legal tussle over San Francisco Bay area spectrum took an odd turn Tuesday when a lawyer representing the community college district that the company has sued declared that its disputed spectrum lease had jumped in value from roughly $1.8 million to $18 million since it agreed to the deal seven months ago.

I detailed the battle first in this item. The Peralta Community College District had declined to lease the spectrum to Clearwire as it previously agreed to because, it said, Clearwire had failed to follow through with a couple of promises.

Like many educational institutions, Peralta had allotted chunks of the spectrum to Clearwire when its value was not deemed very high. Since then, Clearwire has started to roll out a precursor to WiMax wireless broadband Internet access.

VentureWire said attorneys on both sides said the 15-year lease agreed upon in December is worth $1.8 million. But during Tuesday's hearing in the Northern District Court of California, VentureWire reported that Harold Smith, an attorney representing Peralta, said: "We understand that these rights are worth approximately $18 million now."

That isn't surprising. A trademark of companies started by Craig McCaw, Clearwire's co-CEO, is that it buys up undervalued spectrum, finds a purpose for it, and creates a very valuable company surrounding it.

In its original complaint, Clearwire stressed how important the spectrum was to the company. It said that there was no additional spectrum available in the Bay Area, and it believed its competitors owned a significant portion of the rest.

At Tuesday's hearing, VentureWire said Judge Saundra Armstrong signed a preliminary injunction preventing Peralta from negotiating with third parties for the spectrum. A trial will be scheduled at a September conference, and could possibly get under way before the end of the year.

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Tricia Duryee
Tricia Duryee
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