FCC OKs 800 MHz rebanding plan
FCC commissioners today unanimously approved an order to mitigate public-safety radio interference at 800 MHz by realigning operators in the band and granting Nextel Communications 10 MHz of replacement spectrum at 1.9 GHz while requiring the wireless carrier to pay at least $3.2 billion in cash.
The FCC determined the nationwide swath of 1.9 GHz spectrum to be worth $4.8 billion. Nextel’s spectral contributions of airwaves in the 700 MHz and 800 MHz bands—including an additional 4.5 MHz of 800 MHz spectrum for public safety—were deemed to be worth $1.6 billion. Under the plan, Nextel would pay all costs associated with relocating public-safety entities and other 800 MHz users as part of the rebanding process. Nextel also would pay its own relocation costs and those of broadcasters at 1.9 GHz.
If these relocation costs total less than $3.2 billion, Nextel would donate the difference as a “windfall” payment to the U.S. Treasury. If the relocation costs are more than $3.2 billion, Nextel would be obligated to pay that amount but would not have to make any payment to the U.S. Treasury. As a “safety net,” the plan calls for Nextel to take out a $2.5 billion letter of credit to ensure that relocation costs would be paid even if the wireless carrier encountered financial difficulties such as bankruptcy.
Rebanding in the 20 markets deemed to have the greatest 800 MHz interference issues would occur within 18 months after the order becomes effective. Broadcasters at 1.9 GHz must be relocated within 30 months of the effective date, and all rebanding would be completed within 36 months, according to the plan.
During the meeting, FCC Chairman Michael Powell said the two-year proceeding has featured “some of the most ruthless lobbying I’ve ever encountered” and described the matter as “the most difficult, complex, and challenging issue I have ever worked on in seven years at the Commission.”
Whether the rebanding plan will be executed remains unclear. The U.S. General Accounting Office has announced its intent to investigate the matter to determine whether the FCC has the authority to award 1.9 GHz spectrum without conducting an auction. In its order, the FCC indicated its reserves the right to alter its order to comply with GAO findings.
Powell urged Nextel and its shareholders to accept the terms of the deal “for the good of the American people.” If Nextel decides not to comply with the rebanding plan, the wireless carrier will have to adhere to technical “best practices” without receiving any contiguous spectrum. Nextel issued a statement that it is not prepared to make such a determination today.
“The information released today by the commission contains few details regarding the obligations its decision would impose on Nextel,” the company said in a statement. “Once the commission’s order is released, we have an obligation to review all aspects of the decision to fully understand the implications to Nextel’s shareholders.”
Similarly, Nextel rival Verizon Wireless declined to make its position clear before seeing the order, which most analysts believe will not be published for at least a month. Verizon Wireless, which described the FCC’s action as “bizarre,” previously indicated it would legally challenge any order that awarded Nextel 1.9 GHz spectrum without an auction but did not make such a commitment today.
Meanwhile, Powell acknowledged that the order faces several challenges before it can be implemented.
“Yes, we admit, there are risks in the action we take today,” Powell said during the meeting. “But they seem to me to pale in comparison to the risks that our first responders face each and every day.
“This crystal-clear fact demands that the government rise above the normal battles of commercial self-interests and simply find a solution. An enormous amount of time and commitment has been spent on valuations; the nickel and diming of what things are worth. But you cannot put a dollar value on the life of the men and women who wear the shield.”
