Nextel, Verizon Reach Agreement Ending 800 MHz War
Nextel and Verizon Wireless Tues. called a truce ending their fight over the FCC’s 800 MHz rebanding order. Under an agreement, Verizon won’t oppose the plan, which will give Nextel 10 MHz of 1.9 GHz spectrum nationwide. In return, Nextel dropped a lawsuit against Verizon challenging its use of the term “push to talk,” “PTT” and all related terms. Nextel said it wouldn’t pursue trademark or other claims.
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Verizon’s action removes the single most significant impediment to the 800 MHz plan moving forward as approved last summer by the FCC. Verizon was the most vociferous critic of the Commission decision to give its competitor 1.9 GHz spectrum. Sources said CTIA was unlikely to file a lawsuit against the proposal on its own.
The surprise announcement also seems to put to rest questions about whether Nextel ultimately will accept the 800 MHz plan, since Nextel has made a significant business concession to clear the way for the rebanding. The FCC released a complete order Aug. 6. Nextel asked for several changes, which could have saved it hundreds of millions of dollars in retooling costs.
Several sources speculated that while the companies are keeping quiet, there could be more to the agreement than released Tues. Verizon sources had hinted after the vote on the 800 MHz order in July that the FCC was demanding a steep enough price for the 1.9 GHz spectrum that the carrier’s side wasn’t that uncomfortable with the order. Other sources said Tues. that the agreement reflects general detente between the 2 companies, and they don’t expect to see Verizon challenge other aspects of the proceeding, such as the valuation of spectrum Nextel will contribute.
Paul Glenchur, an analyst with Schwab Washington Research Group, said he wasn’t surprised that Nextel and Verizon had come to an understanding after their bitter fight. “Most observers anticipated a lot of litigation,” he said: “We've had our doubts simply because Cingular, CTIA, the other usual subjects, were indicating they weren’t going to litigate it.” Glenchur expects Nextel to endorse the 800 MHz plan: “There are some ongoing issues that are still out there, including getting an increased credit for the spectrum [they contribute under the order], but on balance I think Nextel will go along with the deal.”
Rebecca Arbogast, analyst with Legg Mason, said Verizon appeared to weigh several factors before deciding to compromise with Nextel. “On the one hand they had the litigation risk of plowing forward,” Arbogast said: “There was a good chance they would end up not winning. There was the public relations risk if there was some problem with national security [if the rebanding falls through] and they got the ability to move forward with push-to-talk without Nextel impeding that.”
“It sounds extremely encouraging from an investor’s standpoint. It removes a menacing cloud of litigation that’s really holding the 800 MHz order hostage,” said analyst Jessica Zufolo with Medley Global Advisors. Nextel’s stock price was up 81 cents on the day to close at $26.90 in regular trading.
The Assn. of Public Safety Communications Officials said the development was positive from the standpoint of public safety groups. “We urge Nextel and the FCC to proceed as quickly as possible so that all 800 MHz licensees can move towards implementing the 800 MHz rebanding, which will end dangerous interference to public safety radio systems,” said APCO Pres. Greg Ballentine.