Subject: [NEXTEL-1] WSJ - Nextel's Maneuver For Wireless Rights Has Rivals Fuming

From: [email-masked]
Date: Mon, 19 Apr 2004 05:21:44 -0400

Ok, We all know about the $25 M Nextel paid for getting the E-911
Wavier.

But what is this? ..........."Nextel's foundation has committed $13.4
million to another foundation, established by the Association of-Safety
Communications Officials, or APCO."

Did Nextel dish out a total of $28.4M to APCO?

And I guess this confirms what we already knew..........

"and created a Web site so they could flood Washington
with letters of support."

[email-masked] wrote:

> WSJ - Nextel's Maneuver For Wireless Rights Has Rivals Fuming
>
> For years, when police officers, fire officials and emergency medical
> technicians tried
> to figure out why their urgent radio messages were getting jammed,
> they often found
> the same culprit: Nextel Communications Inc.

---

From: [email-masked]
Date: Mon, 19 Apr 2004 05:13:17 -0400

For years, when police officers, fire officials and emergency medical
technicians tried
to figure out why their urgent radio messages were getting jammed, they
often found
the same culprit: Nextel Communications Inc.

The problem was that Nextel was serving millions of cellphone customers
via a
hodgepodge of radio frequencies. Often, they jumped right up against the
frequencies
that public-safety departments across the nation rely on. The result:
When emergency
messages raced through the airwaves, they sometimes met interference
from Nextel's
cellphone towers.

Initial efforts to get Nextel to fix the problem were frustrating. "
'Too bad' was the
attitude," says Joseph Hindman, technology director of the Scottsdale,
Ari. police
department. Mr. Hindman spent months as technology director in Phoenix
tinkering
with car antennas and replacing equipment to address the glitches. When
Nextel
fixed the problem in one part of town, it soon cropped up elsewhere.

Today, Nextel is using the problem to push for an ambitious deal from
federal
regulators that has its rivals up in arms. It has offered to give up all
of its interfering
frequencies, in return for two big chunks of new radio spectrum worth
billions of
dollars.

In an audacious strategy, Nextel has enlisted the support of
public-safety officials
who used to decry its interference, and joined their chorus of
complaints.

Wrapping itself in post-Sept. 11 patriotism, Nextel now argues that it
needs new spectrum to
protect the lives of police and firemen on the front lines of homeland
security.

"If the FCC votes against the plan, it's not like they're voting against
Nextel, it's like
they're voting against public safety. In this climate, it makes it hard
to vote against it,"
says Blair Levin, a former FCC chief of staff and now an analyst for
Legg Mason Wood
Walker Inc., a major Nextel shareholder.

To sell the plan, Nextel has offered to pay $850 million to emergency
officials and
others to upgrade their equipment. It spent $25 million setting up a
foundation to
fund public-safety organizations and created a Web site so they could
floodWashington
with letters of support. It hired former New York City Mayor Rudolph
Giuliani and sought to link itself with Sept. 11's heroes by sponsoring
a prominent
documentary that other advertisers had shunned.

Its competitors, and some public-safety officials, claim Nextel's bid is
acynical effort
to make a business opportunity out of the aftermath of Sept. 11. They
say the
government should auction new spectrum to the highest bidder, not award
it to
Nextel.

Federal Communications Commission officials are in the final stages of
drafting a
proposal for resolving the issue and are expected to disclose it in
coming weeks.
People familiar with the commission's deliberations expect it to approve
a
version of Nextel's plan. The FCC is likely to ask Nextel to pay at
least $2 billion for the new
spectrum, on top of whatever it costs to upgrade equipment for public
safety and
other users affected by the switch. Some rivals contend it is worth
billions more.

Nextel stands by its proposal and its methods for garnering support.
"It's the only
solution that will permanently resolve interference at no cost to the
taxpayer, with the
added benefit that public safety get the additional spectrum they need,"
says
Elizabeth Brooks, a Nextel vice president. "We are proud of our
relationship
with public safety. It existed long before the ... plan emerged."

All this comes at a critical time for Nextel. Descended from small
two-way dispatchers
of truck drivers and construction crews, it has grown into the nation's
sixth-largest
cellphone company, with 12.9 million subscribers. Its shares, among the
most heavily
traded on the Nasdaq Stock Market, have risen nearly tenfold since July
2002. Nextel
has prospered with its popular "push to talk" technology, which lets
people use their
cellphones like walkie-talkies. But as rivals try to match that feature,
Nextel needs
better spectrum to easily compete on other services, such as
higher-speed wireless
Web surfing.

Small Slices

Since well before Sept. 11, 2001, Nextel has suffered from its unusual
collection of
rights over radio waves, the medium by which cellphone calls as well as
television and
radio programs are transmitted. Because the company built itself by
buying a
mishmash of radio-wave licenses, it ended up with small slices of
spectrum interspersed
with slices used by police, power companies and others. As Nextel has
grown, so has the interference problem.

One way to fix it is go to through the FCC, which doles out almost all
spectrum in
the U.S. With the rapid growth of electronic devices, battles over
spectrum have become
fiercer in recent years.

On the day before Thanksgiving in 2001, Nextel proposed to the FCC to
give up its
many scattered slices of spectrum within the 800-megahertz band in
exchange for a
wider chunk there as well as additional spectrum in a different band.
The plan would
clear up interference, and Nextel offered $500 million to police
departments and
other public-safety agencies so they could upgrade their gear to work on
their new
frequencies. Until then, Nextel had been doing ad hoc repairs around the
country in
response to interference, as well as holding meetings with the FCC to
figure out how
to address the problem.

The proposal set off outrage among competitors, who thought Nextel was
offering too
little for the valuable spectrum. "I give them a lot of points for
cleverness," says Brian
Fontes, the top lobbyist for Cingular Wireless and a former FCC
official.

Meanwhile, Nextel set out to burnish its credentials as a friend of
public safety. In
February 2002, it announced it would underwrite a Sept. 11 documentary
by a pair of
French filmmakers broadcast on CBS.

Nextel got Mr. Giuliani involved in May 2002. He was already a fan. The
Nextel phone
he used on Sept. 11, which functioned during that day, is now in the
Smithsonian
National Museum of American History.

In July, Nextel announced it was spending $25 million to set up a
foundation to
donate to public-safety groups. The money was intended for systems to
identify the
locations of people calling 911 from their cellphones. Nextel's
foundation has
committed $13.4 million to another foundation, established by the
Association of
Public-Safety Communications Officials, or APCO.

APCO would soon become the biggest backer of Nextel's spectrum-swap
plan. That
support had nothing to do with Nextel's donation for the
emergency-number system,
both APCO and Nextel say. Nextel notes that the donation agreement came
before it
made its spectrum proposal. "There's no relationship between these two
things," says
Robert Gurss, APCO's top lobbyist. He points to his group's opposition
to an unrelated
Nextel proposal. "If we were in their back pockets, we wouldn't be doing
that," he
says.

Robert Foosaner, Nextel's chief lobbyist and a former FCC bureau chief,
says the
donation was too small to influence APCO, given the large scope of the
proposed 911
improvements. "If you think we can buy the public-safety communication
officers that
have an $8 billion problem with $25 million, you're drinking Cingular's
Kool-Aid," he
says.

Public-safety officials say they support Nextel's spectrum swap simply
because they
need Nextel's money to upgrade their radios and stop interference. "We
just want to
fix the problem," says Harlin McEwen, president of the International
Association of
Chiefs of Police.

Mr. Foosaner says Giuliani Partners LLC was hired primarily to help
market phones to
public-safety organizations, rather than to promote the spectrum swap.
That is
disputed by Michael Hess, senior managing director for Giuliani
Partners. "

The main thrust of our work was the spectrum project," he says.
According to Mr. Hess, Mr.
Giuliani made several speeches "saying that 9/11 and other emergencies
such as last
August's blackout showed that the [interference] problem needed to be
improved."
One speech was in August 2002 at an APCO convention in Nashville, Tenn.

Giuliani Partners received options covering 1.2 million shares of Nextel
Class A stock
in the third and fourth quarters of 2003 for its work, according to
Nextel.

The same month as Mr. Giuliani's Nashville speech, Nextel submitted a
new version of
its proposal to the FCC dubbed the "Consensus Plan." It increased the
proposed
payout to public-safety officials for equipment upgrades to $700
million, and added
$150 million for other users affected by interference.

And it had another key change: The company asked for new spectrum in the
sought-
after 1900-megahertz frequency, rather than in the 2100-megahertz
frequency as it
originally requested. The lower frequency is considered by some to be
more valuable
because existing cellphone equipment would need only slight alterations
to work on
it. Standard cellphone service isn't currently offered over 2100
megahertz.

Public-safety officials, seeking support for the spectrum swap, asked
Nextel to help
them set up a Web site. The site, consensusplan.org, includes a map of
the U.S. with
interference problems broken down by congressional district. There's
also a page for
filing form letters of support, hundreds of which now fill the FCC's
case docket.

Nextel's role in setting up what's called the Project Consensus Web site
isn't obvious.
The company's support for the plan is mentioned deep within the site.
The "About Us"
portion of the site merely describes Project Consensus as "formed to
gather and
connect support for the Consensus Plan by ensuring that the FCC hears
the growing
voice of concerned citizens and the public safety community."

Over the past year and a half, four major public-safety groups have been
working with
Nextel officials in Washington. They have talked to congressional
representatives and
FCC officials and have met with reporters around the country to get the
word out.

Nextel "took a very bad situation ... and came up with a plan with us to
solve the
problem and also address some of their needs at the same time," says Mr.
Gurss, the
APCO lobbyist. "I don't have a problem with that."

Nextel's opponents have sought to assemble their own public-safety
alliances.
Prodded by Verizon Wireless, the Fraternal Order of Police and the
Federal Law
Enforcement Officers Association recently sent letters to President Bush
opposing
Nextel's plan. "If it's a problem at all -- and no one knows how big a
problem it really
is -- then it might be a good idea to do some intelligent measuring
before we rush
forward on this," says James Pasco Jr., executive director of the
Fraternal Order of
Police.

The FCC says it hasn't done an independent analysis to document the
extent of the
interference. So far, the only way to do so is through reports of
problems, and APCO
says it has tracked down almost 900 of these. Nextel and most
public-safety groups
say this is just a small sampling of the problem, which Nextel says is
also partly
caused by other cellular carriers.

Three Goals

John Muleta, chief of the FCC's wireless bureau, says the agency has
three
goals as it makes its decision: "Solve the public-safety problem. Treat
the licensees as equitably
as possible. And employ sound principles of spectrum management. We
can't be
doing this again in 10 years."

Nextel's rivals say there's nothing equitable about handing 10 megahertz
of spectrum
to Nextel. Verizon Wireless says Nextel's proposal would boost the value
of Nextel's
total spectrum by $7.2 billion. That's far more than the upwards of $2
billion or so
that the FCC is preparing to charge Nextel, according to people familiar
with the
commission's thinking. An analysis by Legg Mason, which is Nextel's
second largest
shareholder, with 8.9% of Class A common stock, puts the gain to Nextel
at  about $3
billion.

Given the demand for new spectrum, any spectrum licenses ought to be
auctioned off
to the highest bidder, Nextel's competitors say.

To be sure, Verizon Wireless and Cingular Wireless own spectrum licenses
worth
billions of dollars that they received free from the federal government
when the FCC
doled out the original cellular spectrum licenses to incumbent local
phone carriers in
the early 1980s. Nextel says it needs replacement spectrum so it can
keep serving its
customers during the switch.

It's a tough choice for the FCC. It doesn't want to upset tens of
thousands of police
and firefighters, especially at a time when President Bush is stressing
homeland
security. And the offer by Nextel to pay for the police to upgrade their
equipment is
appealing, because the FCC can't come up with the money otherwise. If it
auctioned
the spectrum, the money would go into the government's general fund and
wouldn't
be under FCC control.

But regulators also don't want to be accused of a corporate giveaway.
They're still
trying to calculate how much to charge Nextel. As a compromise, FCC
officials are
also exploring offering Nextel spectrum in the less-desirable
2100-megahertz band,
according to people familiar with the matter.

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---

From: [email-masked]
Date: Mon, 19 Apr 2004 05:28:43 -0400

Correction: Did Nextel dish out a total of $38.4M to APCO?

[email-masked] wrote:

> million to another foundation, established by the Association
> of-Safety Communications Officials, or APCO."
>
>> For years, when police officers, fire officials and emergency
>> medical technicians tried
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