FCC Commissioner Kathleen Abernathy said the commission intends to issue a decision about rebanding 800 MHz users in April to resolve public-safety interference issues in the band, which would bring a conclusion to the controversial two-year proceeding.

During a press briefing yesterday, Abernathy also said she is worried about the litigation risks associated with granting 1.9 GHz spectrum to Nextel as part of the deal. Indeed, critics of the Consensus Plan proposal repeatedly have noted that the Communications Act mandates that such airwaves must be auctioned.

Scott Cleland, CEO of The Precursor Group, said such concern is warranted, because “even a five-year-old can tell” the FCC is on shaky legal footing if it gives spectrum to Nextel outside the auction process. For public safety, the concern is that legal maneuverings could threaten the ability to reband in a timely manner, he said.

“[The FCC has] got to thread the needle here, because that decision will be challenged in court,” Cleland said. “They don’t want rebanding to be caught up [in litigation].”

But FCC Chairman Michael Powell, in a letter to 23 members of Congress, this week said the commission has the legal right to award spectrum, noting that Section 316 of the Communications Act “authorizes the Commission to modify licenses if such action will promote the public interest."

In the same letter, Powell said he does not believe Nextel will benefit from the rebanding because its iDEN technology platform is designed specifically to work with non-contiguous spectrum.

According to reports, the FCC staff last week circulated a draft order that included the key components of the Consensus Plan—rebanding 800 MHz to provide contiguous spectrum to public safety and Nextel, which also would get spectrum at 1.9 GHz—but did not include a final payment amount from the wireless carrier.

Nextel has agreed to pay $850 million to offset public safety’s costs of rebanding, but observers believe the wireless carrier will have to pay more. Guzman & Co. telecom analyst Patrick Comack has projected Nextel will have to pay an additional $1.5 billion, which would force Nextel to commit to a total payment of $2.35 billion.

Rep. Vito Fossella (R-N.Y.) this week said Nextel should be required to pay more, because he is concerned Nextel’s $850 million pledge will not be enough to cover rebanding costs.

“The Consensus Plan fails to provide sufficient funding to upgrade public-safety communications, with some estimating a shortfall of $1 billion,” Fossella said in a prepared statement. “Indeed, because no provisions have been made for additional funding to cover public safety’s costs, the taxpayers will likely be forced to foot the bill. The Consensus Plan has the potential to become known as the ‘$1 Billion Tax Increase Plan on the American People.’”

However, Powell said requiring Nextel to pay the costs of 800 MHz incumbents is a sensitive issue—and another aspect that could be subject to future litigation.

“For example, were the costs of imposing such an obligation so nominal as not to affect the value of the license, a court would likely uphold it,” Powell stated in his letter. “Were the cost so high that the commercial entity’s license would be substantially devalued, a court could view the action as an unreasonable modification of the license.”