Dealing with a rude neighbor

In what must be viewed as hubris squared, Nextel Communications, Reston, VA, has proposed a reshuffling of spectrum usage and licensing within the 700MHz, 800MHz, 900MHz and 2,100MHz bands. Claiming that it is having problems meeting its obligation to protect public safety’s use of the 800MHz band, Nextel proposes that the problem be solved by relocating thousands of licensees and hundreds of thousands of users. In sum, the noisy neighbor, Nextel, is suggesting that instead of its turning down the stereo, all the other neighbors be made to move away.

As has been well-reported elsewhere and now admitted by Nextel, operation of Nextel’s 800MHz IDEN system creates harmful electrical interference to analog 800MHz systems. Although Nextel’s spurious emissions have cut up local operators’ systems for years, Nextel has eschewed its responsibility to correct those problems. However, Nextel believes that it may have some obligation to solve the same problem if the victim is a public safety entity.

In the white paper submitted to the FCC, Nextel proposes to “trade” its spectrum holdings in the 700MHz, 800MHz and 900MHz bands for 6MHz of contiguous spectrum in the 800MHz band and 10MHz of spectrum in the 2,100MHz band. Meanwhile, all public safety use would be relocated to a 10MHz-wide contiguous block of frequencies in the 800MHz band, thereby removing public safety radio communications from harm’s (Nextel’s) way.

Non-public safety operators on the 800MHz band would be given an opportunity to relocate either to the 700MHz or to the 900MHz band, or to remain on their 800MHz channels with secondary status. Although Nextel has offered to contribute $500 million toward relocating public safety entities, Nextel does not propose to finance relocating all other affected 800MHz licensees.

People on the block

This article is being written before all groups have had a chance to be heard. Thus far, the industry players are digesting this paper and trying to decide how badly the adoption of the plan would gore their respective oxen. However, if you apply a little logic, the proposed victims begin to appear. They include the following, in no particular order:

• Industrial operators

  — The most obvious group is industrial operators at 800MHz who would either have to finance a relocation to other spectrum or accept secondary status. Either alternative is repugnant.

• Commercial operators

  — Local commercial providers in the 800MHz and 900MHz bands would be shafted. The 800MHz providers are in the same boat as the industrial users, and the 900MHz providers would receive unwanted competition from relocated entities who would not be paying for their use of the spectrum. So, at the same time that 900MHz SMR operators are now paying both interest and principle for spectrum purchased in the earlier auction, relocated users would get, in essence, free spectrum.

• Guardband managers

  — If entities could relocate to the 700MHz band without paying lease fees, then the demand for guardband frequencies would be diluted. Certainly, business plans would be placed on hold by potential users. That kind of delay would be problematic for entities such as Access Spectrum, which is paying interest on debt amassed to pay for spectrum.

• Broadcasters

  — Occupation of the 2,100MHz band coveted by Nextel would require relocating remote broadcast pick-up facilities. The broadcasters would need to find other channels for electronic newsgathering and program uplinks using their the mobile satellite uplink vehicles.

• Cellular

  — Nextel’s plan suggests that cellular operators should be made to pay a portion of the cost of relocating public safety entities. Yet, cellular operators didn’t ask to be made a portion of Nextel’s “solution,” and it has not been clearly shown that cellular operations are, indeed, part of the problem.

• Manufacturers

  — Nextel’s plan recommends new manufacturing guidelines for the production of new 800MHz public safety equipment to make it more resistant to harmful interference. The cost of retooling and trying to get public safety entities to pay the higher cost of that equipment is also quite troubling.

• PCS

• — Although PCS operators have competed well against Nextel in the market, the game board would change radically if Nextel were to obtain the 10MHz of frequencies in the 2,100MHz band for $500 million in relocation costs paid to public safety entities. That deal is equivalent to a 90% discount compared to amounts paid by large carriers in other auctions.

• Relocated 800MHz systems

  — Perhaps the biggest victims are the people who agreed to be relocated by Nextel from the upper 800MHz channels to other 800MHz channels. Although the channels that they accepted were supposed to represent “comparable spectrum,” Nextel’s plan, if adopted, would mean that relocated incumbents received bad goods that would require replacement.

• Public safety

  — Although Nextel’s plan states that public safety users would wind up with more spectrum at 800MHz and would be relieved of interference problems, one has to wonder whether the public safety entities need more spectrum or more money. During the past 20 years, public safety entities have had difficulty migrating from the VHF bands because of the cost, not a lack of opportunity. And the 700MHz band allocation was intended to solve any spectrum shortages. If Nextel is proposing a “safe harbor” at 800MHz for public safety, what does that do to 700MHz plans? If anything, Nextel’s plan creates greater confusion for public safety’s long-term interoperability issues.

The whys

One must then ask why Nextel has offered this plan, and why anyone would support it? The white paper states that the plan would provide protection against harmful interference to 800MHz public safety operations, would provide for blocks of spectrum reserved for incompatible digital vs. analog use, and would rationalize the allocation of affected spectrum. One might be tempted to consider the plan based on these claims alone, but I am a bit more cynical. Or, stated another way, reasonable persons might conclude that Nextel is not merely usurping the FCC’s job by proposing a radically different spectrum management plan. Nextel might be trying to make a buck.

If adopted, the Nextel plan would provide the company with an extremely valuable piece of spectrum at 2,100MHz. Nextel would be accepting a nationwide, exclusive, 10MHz band of spectrum up in the PCS range, to which present PCS equipment might be tuned. Concurrently, Nextel accepts a 6MHz band of spectrum to which cellular radio systems might be tuned. Finally, Nextel has an exit strategy.

Having been saddled with billions of dollars in debt from borrowings made over many years and with no date in sight for profitability, Nextel would be able to trade its patchwork quilt of channels for blocks of contiguous spectrum that might be sold. Following adoption of its plan, Nextel would finally be in position to be acquired by other large carriers—with one buying the 800MHz block to augment cellular operations, and another buying the 2,100MHz band frequencies to augment PCS operations.

Absent such a sale, the acquisition of 10MHz of spectrum in the 2,100MHz band for, essentially, $500 million, would allow the financial analysts to revalue Nextel’s spectrum holdings and adjust its book value to a much higher level. Its stock prices rise based on the increased book value and Nextel’s biggest investors, Craig McCaw, his family and cronies, get a whole lot richer. In fact, the windfall might allow Nextel to obtain enough dough to buy off Motorola and free it from its sole supplier problem, allowing it to switch to CDMA technology.

The why nots

If one simply considers the underlying premise of Nextel’s plan, the “why not” becomes obvious. Nextel’s system causes interference. Nextel should solve the interference problem without compelling the assistance of thousands of licensees, businesses, customers, and operators.

If Nextel wants to effect someone’s relocation to other frequencies, it is free to relocate its own system to either the 700MHz or the 900MHz band to avoid the problem in the future. As it claims, it has plenty of spectra in these bands to trade, so it should be made to use its own solution there. The point is, Nextel’s condition is of its own making, and its problems should be of its own solving. The entire industry should not have to pony up, move out, shift over, and suck up Nextel’s self-serving plan.

The $500 million offered as a down payment on the cost of relocating 800MHz public safety users is likely to be insufficient to cover the cost of relocating of operators even in a single major market. It’s one of those numbers that sounds like a lot, but you can run through it overnight trying to pay for seamless relocation of critical public safety systems.

As for tentative support given by APCO, one need only consider the agenda of the individuals running the organization. Although I am a fan of APCO, too often the managers of the organization assess their success simply in megahertz. Following the tremendous victory obtained by the organization regarding the future use of the 700MHz band, any endorsement of this plan seems ill-focused.

Although adoption of the plan may increase the amount of available public safety spectrum, the plan does not deal with the primary obstacle for public safety entities—money. The plan increases costs to public safety entities by forcing them to pay relocation expenses and does not provide assurances that Nextel will do anything more than seed the relocation fund with $500 million. Therefore, APCO would inadvertently stick its constituents with the check for the balance.

Remember, Nextel’s 800MHz channels were not, by and large, purchased at auction. Nextel obtained much of its spectrum the old-fashioned way, one $35 application at a time, listing every available 800MHz frequency that the FCC’s rules could spew forth. Nextel’s plan suggests that the bulk of its spectrum holdings were obtained via auction. This is nonsense.

Nextel abused the FCC’s processes at every turn to grab, snatch, wrestle and slip away with every wavelength it could. Then it leveraged that activity into the cheapest prices paid for slivers of white space around its contours. The EA licenses it bought weren’t purchased to obtain more spectrum, but rather to create a veneer of respectability laid over a history of application abuse.

Now, Nextel wants to launder its frequencies one more time, and its newest proposed process will slop dirty water over thousands of licensees and business plans. Reasonable people would suggest that Nextel should clean up its own mess without industry or regulatory assistance. Nextel should not create in APCO a co-conspirator that, in attempting to serve its members, might make a deal with Nextel that does not solve the problem of the noisy neighbor, but instead directs the blast at the greater public interest.

A summary of Nextel’s plan

1. Reallocate the 800MHz General Category and interleaved SMR, B/ILT and public safety channels, 800MHz channels 1–400 (806/816MHz–851/861MHz), to create a 20MHz-wide contiguous, primary public safety spectrum block.

2. Reallocate the 6MHz of public safety NPSPAC channels (821/824MHz–866/869MHz) and the adjacent 10MHz of upper 200 SMR channels (816/821MHz–861/866MHz) for advanced technology commercial wireless systems using “interference-limited” multiple low-site, low-power systems architecture. The FCC should license the additional 6MHz to Nextel in partial exchange for the spectrum it will vacate and swap to help implement 800MHz realignment; Nextel is already the dominant incumbent licensee on the adjacent 10MHz.

3. Reallocate 10MHz of contiguous spectrum (2020/2025MHz–2170/2175MHz) from MSS for exclusive terrestrial advanced commercial mobile communications services. This block is currently not being used by any MSS licensee, but includes non-MSS Broadcast Auxiliary Service incumbents that must be relocated to enable advanced mobile communications services to use this band. The FCC should license this 10 MHz to Nextel as part of this proceeding in an even exchange for certain of its licenses totaling 10MHz of spectrum in the 700MHz, 800MHz and 900MHz bands to make the 800MHz band realignment possible.

4. Redesignate 4MHz of the 5MHz of SMR spectrum in the 900MHz band (896/901MHz–934/940MHz), currently licensed to Nextel, for traditional (noise-limited) co-primary B/ILT and high-site SMR use.

5. Redesignate the 50 Business and 50 I/LT channels between 809.75/816MHz–854.75/861MHz from primary B/ILT to primary public safety use as part of the channels 1 – 400 public safety block. Incumbent B/ILT licensees would be permitted to remain on these channels on a secondary, non-interference basis or voluntarily relocate as described below.

6. Redesignate the 4MHz of 700MHz Guard Band spectrum (762/764MHz–792/794MHz) from Guard Band Manager to co-primary B/ILT and high-site, analog SMR use, and modify the current service rules that apply to this spectrum to achieve this objective.

7. Expedite the current schedule for mandatory retuning of all Broadcast Auxiliary Service incumbents at 2020MHz–2025MHz, and to the extent necessary, terrestrial Fixed Point-to-Point Microwave systems at 2170MHz–2175MHz.

8. Require mandatory retuning of all advanced technology (interference-limited) CMRS SMR systems from the new 800MHz Public Safety Block at 800MHz.

9. Require mandatory retuning of all public safety licensees in the NPSPAC channels, 821/824MHz–866/869MHz, to the new 806MHz public safety channels through the assistance of a Special Public Safety Frequency Coordinator, as detailed below. This mandatory retuning of public safety systems would be funded in large part by Nextel, any other advanced technology SMR licensee, and the cellular licensees.

10. Permit voluntary retuning of B/ILT incumbent and noise-limited SMR incumbents to the new 900MHz B/ILT band and traditional SMR spectrum, or to the 700 MHz former Guard Band channels, with the assistance of frequency coordinators on a first-come, first-served basis.