VERIZON WIRELESS SAYS IT WILL BID IN 1.9 GHZ AUCTION

The stepped-up pressure to auction the 1.9 GHz spectrum that is part of the spectrum swap under the “consensus plan” comes amid reports that the Justice Dept.’s antitrust div. has asked Verizon Wireless, Motorola and Nextel for information on the latter’s push-to-talk service. A Nextel spokeswoman confirmed Thurs. the company had received a request for information from DoJ, but she declined to elaborate. “We will provide them with the information,” she said. Verizon Wireless and Nextel this month settled 2 lawsuits filed last summer over push-to-talk technology. Verizon Wireless’s pointed to the DoJ probe of possible antitrust violations as a reason for the FCC to take the “consensus plan” off the table. “The FCC should not be giving free spectrum worth billions of dollars to a company now under investigation for antitrust violations using valuable spectrum it was previously granted by the government,” a Verizon Wireless spokesman said.

The bipartisan letter to Powell appears to point to the FCC’s nearing a decision on a proposal to circulate on the 8th floor. Several sources said an item wasn’t yet circulating. Wireless Bureau Chief John Muleta told reporters this week that staff work on the proceeding continued, and he reiterated the agency still was aiming for a decision before April. “We are troubled by reports that the Commission may address interference problems in a manner that results in an economic windfall to one company and that would violate the competitive bidding requirement of Section 309(j) of the Communications Act,” said the letter from the 23 House members, including Rep. Fossella (R-N.Y.). Nextel wasn’t available for immediate comment.

In a research note, Legg Mason said Verizon Wireless’s invocation of the DoJ probe “appears to be a new bare- knuckled level of lobbying on the contentious proposal to solve public-safety interference problems by rebanding and giving Nextel contiguous spectrum in both the 800 MHz and 1.9 GHz bands, but the question is whether it will be effective.” By teeing up the probe as directed at Nextel, “Verizon may be signaling that it believes it is not a subject of DoJ’s concerns,” Legg Mason said. The firm didn’t foresee the DoJ investigation’s leading the FCC to shelve work on the proceeding unless the Justice Dept. asked it to hold off deciding the spectrum swap. The question is whether “it puts a cloud around Nextel” that could lead the FCC to take a harder than normal look at these issues, Legg Mason said. “In the 1995 consent decree between the Department of Justice and Motorola and Nextel, one of the provisions restricted the companies’ acquisition of spectrum that could be used by potential competitors of the push-to-talk service,” it said.

Verizon Wireless Vp-Business Development Molly Feldman said in a letter Thurs. to Muleta that Commission staff had asked the carrier how much money it would offer in return for the 1.9 GHz spectrum that “Nextel wants for free. Here is our answer: Verizon Wireless is ready, willing and able to participate in an immediate auction of the 1.9 GHz spectrum.” In her ex parte filing on a Feb. 19 meeting with Muleta, Feldman said the carrier believed public safety interference could be addressed just as effectively by realigning the 800 MHz band without involving 1.9 GHz. Under this scenario, Nextel still would receive a “significant windfall” from in- band realignment that “far exceeds the value of the relocation funds it has offered to establish,” Feldman said. She said this meant the FCC should require Nextel to pay all public safety relocation costs.

Nextel, the Assn. of Public Safety Communications Officials, PCIA and others have backed a plan that would entail reconfiguring parts of 700, 800 and 900 MHz -- including Nextel’s swapping spectrum in some bands in exchange for capacity it would receive elsewhere, including 10 MHz at 1.9 GHz. Nextel has pledged to pay up to $850 million for relocating public safety and private wireless incumbents under the plan. CTIA and others have lambasted the plan as providing a “spectrum windfall” for Nextel. The wireless carriers support approaches to fixing public safety interference at 800 MHz that rely on best practices rather than rebanding. Legg Mason said last month FCC staff appeared to be heading toward letting Nextel have the spectrum it sought in the rebanding proposal, but it could come at a higher cost than Nextel proposed.

How to value the spectrum that would be part of the exchange has become a particular touchstone of controversy in the proceeding. Nextel’s valuation of the spectrum swap has been $1.1 billion; Verizon Wireless’s, $7.2 billion. Verizon Wireless, in an appraisal commissioned from Kane Reece, has said Nextel would gain $5.3 billion from the 10 MHz at 1.9 GHz it would receive in the exchange. The remainder comes from having contiguous spectrum at 800 MHz, compared to the current approach of interleaving spectrum in this band.

Given these valuations, the most-recent flurry of filings and letters opposing the “consensus plan” focuses on urging the FCC to auction 1.9 GHz spectrum. Besides Fossella, the House letter was signed by former House Commerce Committee Chmn. Tauzin (R-La.), Reps. Terry (R- Neb.), Radanovich (R-Cal.), Bono (R-Cal.), Boucher (D-Va.), Shimkus (R-Ill.) and others. Sec. 309(j) required the FCC to use competitive bidding and ended its ability to use a lottery system for awarding most spectrum licenses. The lawmakers said they expected the FCC wouldn’t take action on this proceeding until it responded to several questions by March and the House members had a chance to respond.

“Interference can and should be addressed without involving any spectrum outside of the 800 MHz band,” the lawmakers said. They suggested interference could be mitigated by rebanding 800 MHz spectrum so public safety and other high-site communications systems operated on frequencies with adequate separation from operations using low-site cellular infrastructure. “This could be accomplished by reserving the lower portion of the 800 MHz band for public safety and other high-site systems and locating low-site systems in the upper portion,” the letter said. It asked Powell to respond on several points, including whether the FCC agreed with this suggestion for in- band reconfiguration at 800 MHz. Feedback also was requested on: (1) The Commission’s authority to require commercial entities that benefit from rebanding to reimburse displaced incumbents for relocation costs. (2) Whether Nextel’s spectrum value “would increase considerably” if Nextel could consolidate its 800 MHz allocations in a contiguous block. (3) The interest that several entities have expressed in using 1910-1915/1990-1995 MHz band for commercial mobile services. If this spectrum were auctioned, “such an auction would be hotly contested and would raise billions of dollars for the U.S. Treasury,” the letter said.

“Since there is increased interest in using the 1910- 1915/1990-1995 MHz band, please explain how the Commission could simply give any entity a license or licenses to use all, or even part, of the band without violating Section 309(j) of the Communications Acts’s requirement to use competitive bidding to resolve mutually exclusive applications,” the letter said.

Meanwhile, the FCC’s auction of 900 MHz specialized mobile radio licenses closed late Wed., generating $4.86 million in high bids for 55 licenses. Nextel-backed ACI 900 won 46 of the licenses with high bids totaling $4.82 million. The highest bid in the auction -- which lasted 10 days and 76 rounds -- was $657,000, which ACI bid for a license in Atlanta. Before the auction started Feb. 11, the FCC Wireless Bureau turned down a request by the United Telecom Council and Southern communications to postpone bidding on the 896-901 and 935-940 MHz licenses until the FCC resolved issues in the 800 MHz proceeding.