Subject: [NEXTEL-1] VERIZON WIRELESS BID PLEDGE COMPLICATES 800 MHZ PLAN

From: [email-masked]
Date: Mon, 19 Apr 2004 02:01:17 -0400

Sunday, April 18, 2004
VERIZON WIRELESS BID PLEDGE COMPLICATES 800 MHZ PLAN
April 17, 2004 10:16am
Telephony

A promise from Verizon Wireless to open bidding for the 10 MHz of 
1.9 GHz spectrum at $5 billion if the airwaves were auctioned has 
further muddled the FCC's efforts to resolve public safety radio 
interference problems with Nextel Communications at 800 MHz.

Most insiders expected the FCC to decide on a solution by its open 
meeting last Thursday. Numerous reports indicated the FCC's draft 
order used the framework of the "Consensus Plan," which calls for 
rebanding at 800 MHz to give public safety and Nextel contiguous 
blocks of spectrum, with Nextel committing $850 million to pay for 
the retuning of public safety radios.

But the deal also calls for Nextel to receive 1.9 GHz spectrum, 
which the wireless carrier needs to offer 3G services — likely using 
Flarion Technologies' Flash-Orthogonal Frequency Division 
Multiplexing architecture that Nextel is testing with paid customers 
in North Carolina. Valuing that spectrum has been deemed a primary 
sticking point in completing the deal, with the Verizon Wireless 
pledge to bid $5 billion likely adding more pressure from Congress 
to auction the airwaves.

Verizon Wireless and other wireless operators have maintained that 
the Communications Act requires the FCC to auction these airwaves 
rather than awarding the frequencies to Nextel. If the airwaves are 
not auctioned, a legal challenge on the 1.9 GHz spectrum is 
virtually assured.

But Sen. Ted Stevens, R-Alaska, recently wrote FCC Chairman Michael 
Powell a letter that an auction may not be necessary. "If … Nextel 
must give up its spectrum in the 700 and 800 bands to eliminate 
interference to first responders, it must be given replacement 
spectrum elsewhere," Stevens' letter stated. "As author of the 
spectrum auction program, I do not believe an auction would be 
required in this instance."

Furthermore, Stevens noted in the letter that any plan "must be self-
financing," because "our committee does not have the ability to 
appropriate any funds for this purpose."

And financing is crucial for public safety entities, most of which 
cannot afford to pay for rebanding on their own, according to Harlin 
McEwen, chairman of the communications and technology committee of 
the International Association of Chiefs of Police. It also makes the 
Verizon pledge ring hollow, because it would take an act of Congress 
to designate those funds to pay for rebanding, he said.

"If [Verizon Wireless] got this to go to auction and they paid $5 
billion for that spectrum, we have no solution to the problem," 
McEwen said.

As a result, Nextel likely will not have to pay more than an 
additional $2 billion to get the 1.9 GHz spectrum, according to 
Patrick Comack, telecom analyst at Guzman & Co. This is considerably 
less than the Verizon Wireless pledge, but Comack said "the FCC 
basically has no choice," because of pressure from the Bush 
administration to address this issue at a time when Homeland 
Security communications are a priority. "I guarantee you, President 
Bush did not spend time in [Nextel CEO Tim] Donahue's box at Daytona 
to talk about race cars," Comack said.

A deal could significantly affect the commercial wireless landscape. 
Nextel has one of the most attractive customer bases in the 
industry, but its interleaved 800 MHz spectrum is almost useless to 
other wireless operators. If Nextel emerges from this deal with 
contiguous spectrum at 800 MHz and 1.9 GHz, Comack believes the 
wireless carrier will be a consolidation target.

This sentiment is shared by Precursor wireless strategist Rudy Baca, 
who expects an FCC decision by the end of April.

"I've thought Nextel's been dressing itself up for the takeout prom 
for some time now," he said.

http://telephonyonline.com/ar/telecom_verizon_wireless_bid/index.htm

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