VERIZON WIRELESS PLEDGES TO BID $5 BILLION IF 1.9 GHZ AUCTIONED
Verizon Wireless told the FCC late Thurs. it would open bidding at $5 billion if the agency auctioned nationwide PCS spectrum at 1.9 GHz. The pledge by the largest U.S. wireless carrier upped the ante in the battle over 800 MHz rebanding. It came as the FCC neared a vote on a proposal to fix public safety interference, which wasn’t widely expected to entail an auction. Several sources cautioned Thurs. some plan details were still under deliberation, although a majority appears to have coalesced around key elements of a rebanding plan backed by Nextel and others.
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The hard-fought item on the 800 MHz rebanding wasn’t part of a sunshine notice for the FCC’s April 15 agenda meeting released late Thurs. Several sources had speculated earlier in the day that if the proposal wasn’t on the sunshine notice it would likely be voted on circulation in the next week or could appear on a supplementary sunshine notice closer to the meeting date. FCC staff had said as recently as last week they were still hoping to have the item on the April 15 agenda.
Several weeks ago the FCC began weighing a staff proposal that would reband at 800 MHz and give Nextel 1.9 GHz for a price. The “consensus plan” backed by Nextel and many public safety groups involves a spectrum swap in which Nextel would give up some bands for others, including 10 MHz at 1.9 GHz. The carrier would pay $850 million to retune public safety and private wireless incumbents at 800 MHz. The original FCC staff item wouldn’t have included a cap but would have had Nextel pay the difference between incumbent retuning costs and the value of 10 MHz at 1.9 GHz (CD March 11 p1). Meanwhile, Senate Appropriations Committee Chmn. Stevens (R-Alaska) wrote Powell recently that any 800 MHz rebanding plan that involved relocation must be self- financing. He said if Nextel must give up spectrum at 700 and 800 MHz, it should get replacement spectrum, but an auction wouldn’t be required to do this.
Industry sources said Thurs. that a rebanding proposal had gained majority support among the 8th floor offices, but details were still being debated. “The only thing in a sense that isn’t in play is the fundamental choice of rebanding,” said one industry source. FCC Comrs. Abernathy and Adelstein had explored various options for remedying interference to public safety, including a possible bid credit for Nextel for 1.9 GHz (CD April 6 p1). That idea doesn’t appear to be under active consideration. But rumors surfaced this week that other bands could be under consideration in an exchange, including the 700 and 900 MHz bands that were part of the consensus plan but not included in the FCC staff item sent to the 8th floor.
Abernathy is “looking at this item in terms of how to make this item the best it could possibly be for public safety,” said an aide. “She doesn’t have any desire to hold off on any action.” She said: “She is still looking at other possible approaches.”
“There are still some things to be worked through in the text,” one industry source said, adding that outstanding questions as of late Thurs. didn’t appear to involve basics of the rebanding proposal on which the FCC would be voting.
“Our understanding is that what the Commission is considering is the consensus plan in full,” said a Nextel spokesman late Thurs.
Verizon Wireless’s pledge to open bidding at $5 billion if the FCC held an auction for 1.9 GHz came amid press reports that the Commission’s item would have Nextel pay up to $1.5 billion more than the $850 million it had pledged for relocating incumbents. The Washington Post reported Thurs. that the rebanding proposal had the support of Chmn. Powell and Comrs. Copps and Martin. In a letter to FCC Wireless Bureau Chief John Muleta, Verizon Wireless Vp-Business Development said the carrier’s opening bid depended on the FCC’s designation of the bands for a nationwide broadband PCS license and the adoption of PCS rules. “Our willingness to specify an opening bid amount of $5 billion once again shows why the 1.9 GHz spectrum must be licensed through an auction,” she wrote.
Verizon Wireless said in the letter to Muleta that “no private sale can be expected to yield as much value to the government, or place spectrum with the party that will put it to the highest and best use.” The carrier reiterated arguments that earmarking 1.9 GHz for auction would still give Nextel a “windfall” because it would receive contiguous spectrum at 800 MHz in place of the existing scheme of interleaving spectrum.
Verizon Wireless had indicated earlier this year it would participate in an “immediate” auction of 10 MHz of nationwide spectrum at 1.9 GHz if the FCC held one. The letter to Muleta Thurs. marked the first time the company had pledged a specific dollar amount in an opening bid. Verizon Wireless’s Feldman said the bid would depend on the FCC’s designating the bands for a nationwide broadband PCS license and adoption of the PCS rules for this spectrum, as the company has requested in a pending petition. “Using the PCS rules is appropriate given that the 1.9 GHz spectrum is adjacent to existing licensed PCS bands and using these rules will enable the fastest rollout of services on that spectrum to benefit the public,” she said.