NEXTEL ARGUES IT WOULD CONTRIBUTE, MORE THAN GAIN, IN REBANDING

Late last month, Verizon Wireless told the FCC it shouldn’t use a rebanding approach to fix interference problems for public safety at 800 MHz. Verizon Wireless said if the FCC did take that route, rebanding should stay within 800 MHz. The largest U.S. wireless carrier also said it was willing to bid in an “immediate” auction of spectrum at 1.9 GHz, which is among the bands Nextel would receive under the consensus plan in exchange for giving up spectrum elsewhere (CD Feb 27 p1). Cingular told the FCC in a filing last week it backed Verizon Wireless’s arguments that a rebanding solution for 800 MHz interference shouldn’t include the 700 MHz, 900 MHz and 1.9 GHz bands, as well. Besides Nextel, the consensus plan is backed by PCIA, the Assn. of Public Safety Communications Officials (APCO) and others. CTIA, the United Telecom Council and others have backed the so-called “balance approach,” which relies on best practices and other measures rather than rebanding.

The National Taxpayers Union (NTU) echoed those concerns in a letter to FCC Chmn. Powell Fri. telling him the group had “great concern” about the consensus plan. NTU told Powell it had also worked against Northpoint’s effort to circumvent the MVDDS auction process. On the consensus proposal, NTU told Powell it believed “that it carried substantial risk of taxpayer losses as well as the potential to disrupt telecommunications markets for the benefit of just one firm.” NTU argued the FCC has “much better options for resolving sporadic interference difficulties in the 800 MHz area than a wholesale disruption of public safety spectrum and a contingent spectrum giveaway.” The group noted that some estimates had placed the value of the spectrum Nextel would receive under the swap at $7 billion.

But Nextel disputed that figure, which was part of a study Verizon Wireless commissioned from Kane Reece. The Verizon Wireless-backed estimate indicated that the 10 MHz at 1.9 GHz Nextel would receive under its plan was worth $5.3 billion. In a filing at the FCC Fri. titled “What Windfall?” Nextel estimated it would contribute more than $5.4 billion to solve 800 MHz interference, including the $850 million it had pledged to help relocate incumbents. Other costs that Nextel said it included in this figure were $150 million for adding filters on its base stations to provide interference protection and $575 million related to the restrictions on the use of 861-863 MHz channels. Of the latter, Nextel said this was tantamount to surrendering 1 MHz of spectrum, which it valued at $575 million. Nextel valued the 4 MHz of 900 MHz spectrum it would relinquish under the plan at $1.6 billion and the 2.5 MHz it would surrender at 800 MHz at $1.44 billion. In other areas, Nextel estimated it would spend $400 million on its own retuning costs and that the 4 MHz of spectrum it would give up at 700 MHz was worth $350 million.

While Nextel told the FCC it would contribute $5.4 billion to help solve interference, it said at the same time it would receive less than $3.4 billion in replacement spectrum. Nextel said a 10 MHz nationwide 1.9 GHz license would be valued at $3.5 billion based on 203 marketplace transactions. This “reflects [a] realistic, market-based valuation of the 1.9 GHz,” Nextel said. The value of this spectrum is reduced by the $150 million Nextel estimates it would spend for its share of retuning broadcast auxiliary service licensees from 1.9 GHz. Nextel cited another $15 million in expenses for retuning fixed microwave licensees out of the 1910-1915 MHz channel block.

Nextel also argued cellular A Band licensees would receive a “windfall” under its plan connected to a phase-out of the analog cellular service mandate that takes effect Feb. 2008. “Typically, cellular operators reserve the lower channels in their block for analog use,” the filing said. Cellular operators usually provide analog service closest to the National Public Safety Planning Advisory Committee (NPSPAC) channels, Nextel said. When the analog requirement is phased out, cellular A Band operators will deploy broadband technologies on these channels, it said. “Without 800 MHz realignment, cellular A broadband deployment would exponentially increase interference on the adjacent NPSPAC public safety channels, thereby impeding broadband deployment,” the filing said. The consensus plan would relocate NPSPAC public safety channels to the far end of the 800 MHz band, allowing cellular A Block carriers to roll out advanced broadband service without increasing the risk of interference to public safety systems, Nextel said.

Krevor told us Fri. the consensus plan is a “great deal” for cellular carriers, because it gives them “a free ride” in solving interference issues. Nextel said in its Fri. filing at the FCC that cellular licensees such as AT&T Wireless, Cingular, Verizon Wireless and Alltel would receive “substantial benefits” under the plan. Krevor noted that cellular operators contribute to about 25% of interference instances involving public safety, either on a stand-alone basis or in combination with Nextel. In addition, the benefits that public safety would receive under the plan are “hug,” but difficult to quantify because public safety receives spectrum as part of free allocations.

When first proposing to the FCC a rebanding plan for fixing public safety interference, Nextel indicated its commitment to paying a capped amount for relocation costs would be contingent on the major elements of the plan remaining intact. Krevor said Fri. that hadn’t changed. “If the Commission does it with in-band realignment only, that’s not anywhere near the consensus plan. We can’t propose to pay for it and we wouldn’t” under that scenario, he said.