Nextel disputes Verizon Wireless claims
Nextel Communications yesterday filed a letter with the FCC refuting two recent proposals by Verizon Wireless that would keep the agency from awarding Nextel 1.9 GHz spectrum as part of a plan to address interference issues in the 800 MHz band negatively impacting public-safety communications.
Specifically, Nextel cited technical and legal problems with the notion that the FCC substitute 2.1 GHz spectrum for the 1.9 GHz airwaves included as compensation to Nextel. In addition, the letter says the FCC should take Verizon’s offer to bid $5 billion for the 1.9 GHz spectrum with a “grain of salt.”
Trying to resolve interference problems for public safety, the FCC is considering a staff report based on the framework of the so-called Consensus Plan, which is supported by most major law-enforcement organizations. Nextel characterized Verizon’s proposals as “anti-competitive”, claiming that none of Verizon’s ideas would resolve the interference problems at 800 MHz.
Under the Consensus Plan, interleaved spectrum at 800 MHz would be rebanded to provide contiguous spectrum for public safety and contiguous spectrum for Nextel. Nextel would pay $850 million to retune radios associated with rebanding and also would give public safety 4 MHz of additional spectrum that law-enforcement officials claim is sorely needed.
In return, Nextel is seeking 10 MHz of nationwide spectrum at 1.9 GHz to provide advanced data services. Although the Consensus Plan does not call for Nextel to make any additional payments, most analysts believe the FCC will ask the carrier to pay an additional $2 billion for the spectrum.
Other commercial wireless carriers claim these airwaves are far more valuable than the spectrum Nextel is seeking to replace, with Verizon Wireless officials repeatedly referring to the proposed deal as being a “windfall” for Nextel. If the 1.9 GHz airwaves were available for an immediate auction and licensed based on PCS rules—something Nextel expects, according to spokesman Tim O’Regan—Verizon vowed earlier this month to submit an opening bid of $5 billion.
In its letter, Nextel described the Verizon offer as “far-fetched” in its valuation of the spectrum and “irrelevant,” because it would not help resolve the 800 MHz interference problem—specifically, because auction proceeds must be given to the U.S. Treasury and cannot be earmarked to pay for rebanding, as Nextel has committed to do.
Nextel also said the Verizon $5 billion valuation lacks credibility, noting that the many conditions cited “provide Verizon several ready excuses to retract its bid offer.”
As for the notion of substituting 2.1 GHz spectrum for 1.9 GHz airwaves, Nextel said the FCC should not consider it when the agency has no record on the subject—all comments to the commission have been based on granting Nextel 1.9 GHz spectrum. Nextel said the 2.1 GHz airwaves have incumbent users that would be more difficult to clear and that such a substitution would not reduce the chance of a legal challenge, because other commercial operators have threatened to litigate any spectrum award to Nextel on the basis that all airwaves should be auctioned.
Finally, Nextel’s letter noted that using the 2.1 GHz frequencies would greatly increase its costs to build a network, making it less attractive to the wireless operator—a fact it contends Verizon knows very well.
“Verizon’s latest antics are solely about delaying the Consensus Plan in order to delay Nextel receiving any replacement spectrum in this proceeding,” Nextel’s letter states. “Verizon’s tactics are intended to prevent Nextel, for as long as possible, from offering advanced wireless spectrum on this replacement spectrum.”
