Subject: [NEXTEL-1] Be Careful About Wishes

From: [email-masked]
Date: Thu, 29 Jul 2004 12:12:32 -0400

-------- Original Message --------
From:	Robert Schwaninger <[email-masked]>
Subject:	Be Careful About Wishes

As we all await the FCC's order on 800 MHz rebanding, one must consider about the grant of Nextel's wish to have the spectrum rebanded so that it could capture the 1.9 GHz spectrum.  Since it further appears that the FCC will not require Nextel to give up the 900 MHz spectrum, thus allowing Nextel to use that spectrum, one has to wonder about how this deal works for Nextel.
The cost of relocation is estimated to be around $2.5 billion, none of which nets Nextel a dime.  Although the book value of Nextel's new, fully contiguous spectrum is greater, that book value may or may not translate into higher revenue figures - and it must be discounted by the value of the spectrum given up at 800 and 700.  Add to that the $20,000 or so for each new filter that Nextel will deploy and the cost of the reband keeps going up and up.
Now, add to the foregoing the cost of a 1.9 GHz build out, requiring more sites than Nextel currently operates at 800 MHz.  Add to that the cost of building out the 900 and one starts to see that Nextel's cost of taking advantage of the deal could easily run into the $10-15 billion range over the next five years.  How many more customers will Nextel gain to offset these costs?  What features may it add to keep up its RPU?  What will be the effect from competition?
Although I was against the reband because I believe that it shifted the burden from the interfering party(ies) to the victims to resolve foreseeable, fixable, problems; and I may still be involved in appealing the agency's order, depending on the ultimate content.  I gotta say, Nextel may wind up being the ultimate victim of its own lobbying success. 
Therefore,
I'm not surprised that the sounds of popping corks has not been heard coming from the Nextel headquarters.  Champagne's pretty expensive and Nextel may need to watch how it spends from now on.  
Robert Schwaninger

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