Latest Verizon whine much ado about nothing
Verizon Wireless is carving out quite the reputation for itself. There are many in the public-safety community who believe the carrier will stop at nothing to make sure Nextel Communications doesn’t get valuable spectrum at 1.9 GHz as part of the FCC’s 800 MHz rebanding order, even if it means blowing up the order and perpetuating the interference that wreaks havoc with first responder communications across the country.
Verizon Wireless was at it again this week, as it expressed “deep concern” over allegations raised in an investment firm report that said Nextel and the FCC are engaged in post-order discussions to reduce by as much as $700 million the financial contribution Nextel will make to the U.S. Treasury under terms of the order (see story). Right now, the order — which hasn’t been submitted to the Federal Register for publication, which makes it official — calls for Nextel to contribute at least $4.8 billion in cash and spectrum. In return, Nextel would receive more valuable contiguous spectrum at 800 MHz and spectrum at 1.9 GHz that it covets for the provisioning of advanced services.
In a letter to FCC Chairman Michael Powell, attorneys for Verizon Wireless suggested that Nextel and the FCC are engaging in sneaky behavior. “If such discussions have taken place, Nextel’s ex parte filings certainly do not put the public on notice that the company is seeking to increase the size of its windfall, at the expense of the American taxpayer,” the letter said.
Public-safety officials I spoke with this week declined to comment on the allegation, primarily because they were unsure of its validity, though one official said, “It sounds to me like more sour grapes from Verizon.”
Washington insider Rudy Baca, wireless strategist for Precursor Group, said this latest tactic is simply a continuation of the hardball approach Verizon has taken throughout the proceeding. “Don’t forget that they threatened each commissioner with personal criminal liability if they awarded Nextel the 1.9 GHz spectrum outside an auction,” Baca said. “That’s not a shot across the bow, that’s hitting them broadside.”
Baca added that while negotiating revised terms after an order has been issued would be impermissible, discussing and clarifying factual matters is quite okay. He thinks the FCC is working with Nextel to clarify the carrier’s obligations in order to convince Nextel to get on board. “The FCC had hoped Nextel would sing ‘Kumbaya,’ but that didn’t happen,” Baca said. “So now the commission is trying to convince Nextel that the order represents its best option.”
He added that the commission has taken a carrot-and-stick approach with Nextel throughout the proceeding. For instance, the FCC is forcing Nextel to pay considerably more than the $850 million the carrier hoped to pay for the rebanding, but the commission also reallocated H block spectrum that is adjacent to the 1.9 GHz spectrum Nextel would receive. “Nextel was the only carrier that urged the FCC to do this,” Baca said. “Because the H block spectrum is contiguous to the 1.9 GHz band, should Nextel acquire H block spectrum, it would increase the value of the 1.9 GHz spectrum it’s getting under the rebanding.”
Baca said to forget any notion of Congress getting involved in this mess, an idea floated by FCC Chairman Michael Powell last week. Powell would like to see Congress pass legislation that would effectively make the FCC’s order law, reducing the chance of litigation. Verizon Wireless steadfastly has threatened to mount a legal challenge to any spectrum award to Nextel outside an auction.
“That’s probably not going to happen. [Sen. John] McCain has said he has other priorities,” Baca said. McCain chairs the Senate Commerce Committee, which is where such legislation would end up.
Baca suggested Powell knew that even before he called on Congress to take action, but wanted to send a clear message. “He wants Nextel to know that if it comes to it, he’ll push it up to the Hill and then rebanding will become mandatory.”
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Editor’s Note: If you want to learn everything you ever wanted to know about the 800 MHz order and the rebanding process, attend one of the IWCE-sponsored “road shows” that will be held across the country this fall. Click here for more info.