Subject: [NEXTEL-1] With Rebanding, It's All Politics From Here

From: [email-masked]
Date: Wed, 28 Jul 2004 15:08:42 -0400

With Rebanding, It's All Politics From Here
Jul 14, 2004

Despite the fact that last week's landmark unanimous decision at the FCC
finally closed the book on the initial carping between Nextel [NXTL],
Verizon Wireless and a host of industry advocacy groups, the best (or
worst) is yet to come as the public-safety arena waits to see the text
of the report and order governing the 800 MHz rebanding initiative.

Nextel, which has fought "the good fight" for the past two-and-a-half
years, remains strangely silent, even though - prima facie - it got most
of what it wanted.  The Wireless Telecommunications Bureau and the
commissioners, who even at the 11th hour were listening to last-minute
concerns voiced by the fire and police community, are offering a plan
that gives Nextel two five-megahertz blocks of spectrum at 1,910
MHz-1,915 MHz and at 1,990 MHz-1,995 MHz in return for Nextel's giving
up some of its 800 MHz space and all of its 700 MHz claims along with
relocating all 800 MHz incumbents to make room for more public-safety
users. However, there is a price for all of this, and it's more than
Nextel was counting on paying.
It is, perhaps, the staggering amount of the letter of credit Nextel
must produce --

$2.5 billion - that made such meeting attendees as Robert Foosaner,
senior VP of Nextel's regulatory and legislative affairs, come late and
leave early without nary as much as a "hallelujah" when the vote was
taken. The carrier remains mum nearly a week later.
It probably didn't come as much of a surprise that Nextel's proposed
$825 million or so in relocation guarantees probably was going to be
questioned, but this new figure (which doesn't include an anti-windfall
balloon payment that may be due when all is said and done three years
from now) has to hurt. Said John Muleta, chief of the WTB, "We are
expecting Nextel to complete this process no matter what the costs end
up being."

Wireless Business Forecast believes the commission upped the ante for
three possible reasons: because it wanted to make sure relocation goes
smoothly and that there is plenty of money to make sure the job gets
done, that the worth of the spectrum at 1.9 GHz hasn't been valued
accurately yet and that it had to make some kind of overture to those
who wanted to make sure Nextel didn't get something for nothing.

To say it was no easy task for the FCC to finally codify a public-safety
anti-interference plan is the proverbial understatement. In a previous
issue of WBF, we reported some perceived hesitation on the commission's
part to move forward with much of Nextel's proposal instead of going
with another backed by Verizon Wireless and the Cellular
Telecommunications & Internet Association (CTIA), mostly due to possible
litigation. There was no lack of resolve, however, in Chairman Michael
Powell's voice when he said, "This was the most difficult and
challenging issue I've worked on in seven years, but the cause is just
and public safety deserves no less."

Explaining that the commission had not approved the Consensus Plan
outright, Powell said that the commission's R&O (based strongly on the
plan) was a "fair balance of the issues, and it's the best we could do."

Powell also mentioned that the lobbying by both sides during the process
was "the most ruthless we've ever seen," but his particular ire focused
on a six-page letter sent by Verizon's chief counsel William Barr that
came off as a veiled threat regarding litigation should the FCC vote
along Nextel lines. "Much has been made of the legal risks" of the
commission's decision, Powell said after the vote. "Yes, there are risks
to what we do today, but it's nothing like public safety faces every
day. We have to go beyond just commercial values [of the 1.9 GHz
spectrum].  How do you value the lives of men and women who wear the
shield?"

Privately, Commissioner Jonathan Adelstein told WBF it was a long haul
but that he was looking forward to working with both Nextel and the
public-safety community to get rebanding going.

Expect to see litigation in some form after the paperwork comes out.
While Nextel has kept quiet, issuing nary a press release, Verizon
Wireless already has thrown down the gauntlet, releasing a statement
that said, in part, that public safety (which has been waiting nearly
two decades for interference relief) "would have been far better served
if the FCC had allowed the [GAO] and Congress to assess the legality of
the Nextel spectrum grab before approving it."

But what do first responders think? Public-safety officials who were
apprehensive about the outcome of the meeting prior to the vote are
praising the decision, of course, because the timeline for conversion -
18 months in the top 20 most congested areas and 36 months for a total
transformation -- has been set and the money is there. Having said that,
they now are waiting to see what happens next.  Such groups as APCO
International, the International Association of Chiefs of Police, the
National Sheriffs' Association, the Major Cities Chiefs' Association,
the Major Counties Sheriffs' Association and the International
Association of Fire Chiefs were on board with the Nextel plan prior to
the vote, and Charles Werner, deputy fire chief in Charlottesville, Va.,
told us, "Now we hold our breath. We've got a decision, and it delivers
the basic concept of the [Consensus] plan. We just want to get
rebanded."

What About Equipment?

Once public-safety organizations are relocated to their new spectrum
homes, the next question is: What to do about new gear? There is no
doubt the monies spent by Nextel to reband will be much less than what
public-safety organizations will pay to go digital and interoperable,
and this could mean big bucks for manufacturers that need to diversify.
Gene Stilp, coordinator of the ad hoc First Response Coalition and a
volunteer firefighter, EMT and vice president of the Dauphin-Middle
Paxton Fire Company #1 in Dauphin, Pa., opposed the Consensus Plan
because it didn't promise to fund new gear, and he believes it will cost
agencies nationwide between $5 billion and $10 billion to change out
equipment.

Werner's organization is getting ready to change out from being a
low-band operation to building a 800 MHz system with a $6 million grant
it just got from the Federal Emergency Management Agency. He thinks that
Nextel and Motorola [MOT] now will team to offer a public-safety network
that melds the successful iDEN consumer program with Motorola's
traditional lock on the public-safety market. The manufacturer/carrier
team already has been making presentations to public-safety groups, as
have Cingular Wireless and AT&T Wireless [AWE]. A Motorola/Nextel hybrid
could be a slam-dunk for the companies, Werner says, because 19 of 20
jurisdictions he deals with in his area are Nextel-based.

And don't discount M/A-Com, a Lowell, Mass.-based manufacturer of
microwave and RF technology that also is a subsidiary of Tyco
Electronics. It has been working diligently to garner as many contracts
as possible with public-safety entities as new funding becomes available
for data networks. Werner's shop is going with M/A-Com for its new data
network, and the company inked another $3.6 million with Somerset
County, Md., in which it will build an interoperable communications
network for the county's public-safety agencies that, like many others,
have been unable to communicate over their separate radio systems when
responding to emergencies.

Raytheon JPS Communications, which had people in attendance at the FCC
meeting last week, already has entered the fray, marketing its ACU-1000
that can link all kinds of radios (including Nextel's), satellite
communications, Wi-Fi, cellphones and traditional telephony modes over
one network. It's also marketing a self-contained Mobile Communication
Kit that can be deployed into vans, buses and HumVees to help
first-response agencies set up on-site incident command posts that can
communicate with the ACU-1000-facilitated network.

>>Chairman Michael Powell, 202/418-1000 ; Commissioner Jonathan
Adelstein, 202/418-2300;

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