Subject: [NEXTEL-1] National Taxpayers Union (NTU) On 02-55

From: Marcelrf <[email-masked]>
Date: Thu, 01 Apr 2004 02:58:27 -0500

National Taxpayers Union (NTU) On 02-55

March 5, 2004

The Honorable Michael K. Powell
Chairman  Federal Communications Commission
445 12th St., SW
Washington, DC 20554
Re: WT Docket # 02-55

Dear Chairman Powell:

On behalf of the 350,000 members of National Taxpayers Union (NTU), I
write to relate our great concern over the fiscal prudence of a
“Consensus Plan” to resolve interference problems among public safety
agencies that utilize the 800 MHz band for their communications. After
examining the outlines of this proposal, NTU believes that it carries
substantial risk of taxpayer losses as well as the potential to disrupt
telecommunications markets for the benefit of just one firm.

As you may know, for more than a decade NTU has actively championed a
competitive auction process for spectrum, and was a founding member of
the Coalition for Fair Spectrum Auctions. Our most recent work centered
on a misguided attempt from the firm Northpoint to circumvent the
Commission’s wise decision that wireless cable firms should bid for
set-aside airwaves competitively. In the end, taxpayer advocates carried
the day when Northpoint’s $100 million giveaway was deleted from the
Senate’s version of the Commercial Spectrum Enhancement Act.

NTU was therefore surprised to learn that the Commission was considering
a proposal developed by Nextel to resolve a relatively modest problem of
communication interference among public safety systems with a heavy
regulatory hand. It is our understanding that this “Consensus Plan”
would, in order to mitigate “incidents” that were reported among 1
percent of all such systems last year, shuffle 100 percent of the public
safety users in the 800 MHz band around a federally-directed relocation
process.

Such a drastic solution would be troubling enough, were it not for the
implications to taxpayers. Nextel would pledge some $850 million to
finance the plan, $700 million of which would be disbursed through an
uncertain process to help government agencies adapt their communications
networks to the new spectrum arrangement. More important, however, is
that Nextel’s pledge comes with a condition – Nextel would receive 10
MHz of spectrum within the 1.9 GHz band for its own use. The upshot is
that Nextel could receive airwaves with a commercial value of more than
$7 billion, according to an estimate reported by Kane Reece Associates.

Granted, the prospective value of spectrum is subject to many different
interpretations, depending upon the business plans and motivations of
the parties involved. Yet, this is precisely the most compelling reason
for the auction process in the first place – to allow competitive
bidding to actively establish a real-world, “best value” for airwaves
whose sale will benefit taxpayers now (immediate proceeds) and in the
future (market-driven private sector communications development).

In the final analysis, the FCC appears to have much better options for
resolving sporadic interference difficulties in the 800 MHz area than a
wholesale disruption of public safety spectrum and a contingent spectrum
giveaway. As a recent letter from Members of Congress to the Commission
suggested, “re-banding” the 800 MHz spectrum to better separate
high-site and low-site communications systems could be a much more
measured approach relative to the size of the problem.

Although the issues surrounding this debate are complex, for the public
one concern is paramount – to ensure that the airwaves belonging to
taxpayers are put to their most economical use through auctions. With a
burgeoning budget deficit, the last action officials should contemplate
is giving away taxpayers’ property.

Accordingly, we urge the Commission not to act precipitously by
sanctioning a spectrum giveaway to Nextel through the 800 MHz “Consensus
Plan.” Fiscal responsibility demands a more thoughtful policy.

Sincerely,
John Berthoud
President

cc: Members of the Energy and Commerce Committee of the House of
Representatives

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