Verizon Wireless attacks latest Nextel proposal

Jun 9, 2004 12:00 PM, Donny Jackson

Verizon Wireless today said Nextel Communications’ revised proposal to realign 800 MHz frequencies creates a greater “windfall” for Nextel while introducing the kind of interference risks the plan purportedly is supposed to resolve.

Nextel last week altered the “Consensus Plan” proposal that is designed to mitigate interference currently experienced between Nextel and public-safety entities at 800 MHz. The revision called for Nextel to contribute an additional 2 MHz of spectrum at 800 MHz that would create 40 additional channels for public safety and increase the value of Nextel’s total contribution to $5.155 billion.

“[Nextel’s latest proposal] looked lovely,” Verizon Wireless spokesman Jeffrey Nelson said. “But when we got under it, it barked back—like a dog. ... They outlined a proposal in a page-and-a-half without offering any information on it.

“This doesn’t do anything to move the process forward. It makes it appear that Nextel is sweetening the pot when, actually, it is not.”

Specifically, Verizon Wireless said Nextel should not be considered a significant improvement, because Nextel apparently is removing 4 MHz of 900 MHz airwaves previously offered in the Consensus Plan. Moreover, Nextel is proposing to contribute “junk” interleaved spectrum while asking for a 10 MHz swath of premium 1.9 GHz mobile wireless airwaves in return, according to the filing.

“Nextel’s valuation for its interleaved 800 MHz spectrum implies a value of over $5.7 billion for 10 MHz,” Verizon Wireless said in a filing with the FCC. “At the same time, Nextel maintains that 10 MHz at 1.9 GHz is only worth $3.335 billion. The obvious inconsistencies inherent in these valuations are impossible to reconcile.”

Verizon reiterated its position that awarding Nextel spectrum without conducting an auction is illegal—a position it has said it will abandon if the FCC grants 2.1 GHz spectrum instead of airwaves at 1.9 GHz—but said Nextel should provide more cash than called for in the Consensus Plan. Many analysts believe rebanding costs will be much greater than the $850 million Nextel has agreed to pay.

Additional cash would be much better than the spectrum included in Nextel’s latest revision solves nothing, because the airwaves it is offering are located in frequencies immediately adjacent to Nextel’s holdings—the circumstance that has generated interference for public-safety communications in the past, according to Verizon Wireless.

“If Nextel relocates public-safety licensees adjacent to its operations, it is recreating exactly the same interference problems that public safety has been asking Nextel to correct for the past four years,” Verizon Wireless said in its FCC filing.