WASHINGTON-Legg Mason Inc., which owns just over 9 percent of the stock for Nextel Communications Inc., said Monday it expects Nextel to accept the Federal Communications Commission’s plan to solve public-safety interference in the 800 MHz band.
“Once the order is published in the Federal Register, Nextel will have 30 days to decide whether to accept the FCC’s terms and conditions (the order will take effect in 60 days). We continue to think it is likely Nextel will ultimately accept, though we note that the FCC document is 256 pages long (including all the appendices and statements) and will take some time for parties, including Nextel, to fully digest the complex technical, economic, policy and legal details. If Nextel’s concerns are relatively modest, it could seek FCC assurances informally, and if unsuccessful, file a petition for reconsideration,” said Legg Mason in a note to investors.
Legg Mason owns 9.14 percent of Nextel stock. It is the second-largest institutional investor behind Fidelity Management & Research Corp. Legg Mason has never been shy about its relationship to Nextel, hosting an investor call on the Consensus Plan when it was first presented to the FCC in 2002.
The Consensus Plan was the proposal put forward by Nextel, some public-safety advocates and private wireless. The FCC adopted significant portions of the plan but has made some changes, including requiring Nextel to pay money into the treasury if the value of the spectrum it returns and relocation expenses do not equal $4.86 billion.
The United Telecom Council, which had fought against Nextel, came out in support of the plan in its final form.
“UTC sees more benefits to critical infrastructure and utilities,” said UTC, noting it has been chosen for the Transition Administrator search committee. “UTC appreciates the FCC’s recognition that critical infrastructure must be grouped with traditional public safety for spectrum-based interoperability and emergency response.”
The FCC will take nominations from the Transition Administrator search committee.
In addition to UTC, Nextel, the Association of Public-safety Communications Officials, the Industrial Telecommunications Association and SouthernLinc were also selected for the search committee. The Transition Administrator will be responsible for facilitating the 800 MHz rebanding, including how Nextel will pay the relocation costs.
The First Response Coalition, which emerged as an opponent to the Consensus Plan in June, again urged Congress to overturn the FCC plan, auction the 1.9 GHz spectrum and use the proceeds to facilitate public-safety interoperability.
“The commission’s final rule may be a sweet deal for Nextel, but it leaves a bitter taste in the mouth of the police, firefighters, emergency medical technicians who would be best served by a more comprehensive approach. Congress can set this mess straight by killing two birds with one stone: the Nextel-created interference problem and the unresolved interdepartmental communications problems highlighted in recent days in the 9/11 commission report,” said Gene Stilp, coordinator of the First Response Coalition. ” The coalition continues to believe that the best-and only legal response-is a spectrum auction that earmarks funds for first responders by addressing the interference problem and also wipes out the interoperability crisis that still persists today as we approach the third anniversary of the tragic events of Sept. 11.”
Stilp said his organization is pushing hard for congressional action because “the other organizations are waiting for Nextel. The other organizations are held captive by Nextel. We can speak now so we are going to take advantage of it.”
Although Stilp’s credentials have been questioned, he assured RCR Wireless News that he truly cares about solving the interoperability problem facing public safety. “It seemed like a no brainer that the FCC was circumventing the auction, and this was a real issue,” he said. Stilp said he joined the fire community following the terrorist attacks on Sept. 11 as a way to serve his community. He has been certified as a firefighter 2, an emergency medical technician and a hazardous materials technician. He acknowledged that “it is unique that a person with a consumer background would be fighting for public safety.”
The FCC released the details of its plan after the close of the business Aug. 6. It has remained unclear whether Nextel will accept the plan because the company has refused to comment until the full text is released.
Some of the specifics included in the decision are:
- That the band reconfiguration be completed in phases within three years from the public notice announcing the start date of the reconfiguration. Nextel also would have to meet interim benchmarks at 18 months or face potential fines or other penalties.
- Nextel gives up spectrum at 700 MHz and 800 MHz, but not 900 MHz, in exchange for nationwide authority to operate in 10 megahertz of spectrum at 1910-1915 MHz and 1990-1995 MHz. Nextel must reimburse UTAM Inc. and other incumbents for relocation costs within 30 months.
- Nextel must secure its commitment to pay all relocation costs with an irrevocable letter of credit for $2.5 billion.
- At the end of the 36 months, when the re-banding process is completed, Nextel would be given a $1.607 billion credit for relinquishing rights in the 800 MHz band.
- The commission set technical specifications defining “unacceptable interference.”
