WASHINGTON-The Federal Communications Commission is considering a staff proposal that would give Nextel Communications Inc. 10 megahertz of spectrum in the 1.9 GHz band in a rebanding plan to solve the public-safety interference problem in the 800 MHz band, but Nextel would be required to pay more than the $850 million it suggested in late 2002.
“We believe Nextel is unlikely to accept a small amount of spectrum because it does not satisfy its long-term business plans. We believe that Nextel will insist on something close to 10 megahertz in exchange for funding the relocation at 800 MHz. The FCC, under its more recent value-to-value approach, as opposed to the megahertz-for-megahertz approach, may be willing to accept greater relocation reimbursement for Nextel in return for the additional spectrum in the 1.9 GHz band,” said Rebecca Arbogast of Legg Mason in an investor note.
The plan presented last week by the FCC’s Wireless Telecommunications Bureau has been endorsed by FCC Chairman Michael Powell, but now he must convince a majority of his colleagues to join him amid increasing pressure from Capitol Hill to avoid the appearance of a spectrum give-away to Nextel.
“I understand that there are a couple of competing solutions that have been offered to address the problem of public-safety interference. I rely on your judgement to make whatever policy decision you deem to be in the best interest of the public, but I have serious reservations about any solution that does not involve the established auction process. It has been my belief that the auction process brings in the largest amount of receipts to the treasury,” wrote Rep. Jim Nussle (R-Iowa), chairman of the House Budget Committee in a letter to Powell dated March 3.
The final rules to solve the 800 MHz problem is on a fast track since there is a desire for it to be considered for the April 15 meeting agenda, said an FCC official who declined to be named.
Nextel has been the leading force behind the Consensus Plan also supported by the Industrial Telecommunications Association and several public-safety advocacy groups.
The Consensus Plan would shuffle the 800 MHz band to eliminate the current situation where public safety, private wireless, Nextel and cellular carriers are intermingled. Nextel has said that it would pay $850 million for the necessary retuning of public-safety and private-wireless radios. Nextel said it would deposit $100 million in an escrow account and secure irrevocable lines of credit for the remaining $750 million. In exchange for giving up spectrum in the 700, 800 and 900 MHz bands and for paying to retune public safety and private wireless, Nextel has asked for 10 megahertz in the 1.9 GHz band.
All of the commissioners have publicly stated that they believe the first priority should be to solve the public-safety interference problem as soon as possible but now they must wade through the technical details of how to accomplish that. There are literally reams and reams of paper on the subject and the rhetoric has become intense as the staff was finishing up its recommendation.
But now that a decision has reached the 8th floor where the commissioners’ offices are located, all sides are confident that they will win out in the end.
There are no easy answers. Steve Largent, president of the Cellular Telecommunications & Internet Association said the 800 MHz issue was one he inherited when he took over from former President Thomas Wheeler late last year. He has had to jump in with both feet. He told RCR Wireless News after giving a speech to state regulators on March 7 that he recently met with John Walsh of “America’s Most Wanted.” His meeting with Walsh came after the TV show aired a segment supporting the Consensus Plan. CTIA opposes the Consensus Plan. CTIA and the United Telecom Council favor the Balanced Approach Plan, which calls for timely resolution of current interference at the expense of the interferor, coupled with technical rules, notification and coordination procedures to prevent new interference.
