Let the rebanding begin
In an almost anticlimactic announcement, Nextel Communications last month said it would accept the terms of the FCC’s 800 MHz order, in which Nextel will pay all rebanding costs in return for contiguous spectrum in the 800 MHz and 1.9 GHz bands.
Under the FCC order, Nextel must contribute at least $4.8 billion in spectrum and cash to pay for rebanding, which is designed to mitigate interference to public-safety communications in the 800 MHz band. In addition, public safety will receive additional spectrum in the deal. However, Nextel’s acceptance of the order was a prerequisite to rebanding, and the FCC had established a deadline of Feb. 7 for the wireless carrier to announce its decision.
“So on behalf of Nextel, it’s my privilege and honor to answer, ‘Yes,’” said Nextel CEO Tim Donahue during a press conference announcing the decision. “Nextel accepts the responsibilities, obligations, license modifications and conditions specified in the FCC’s Report and Order to eliminate 800 megahertz CMRS-public-safety interference. The FCC’s decision is simply the right thing to do for first responders … and our nation’s homeland security, and for Nextel.”
FCC Chairman Michael Powell, who also attended the press conference, recalled the difficulties associated with the three-year proceeding but said the favorable result for first responders was well worth the effort.
“It is one of the most significant things I have ever had the privilege to be involved in and one in which I am enormously proud,” Powell said. “I will tell you, I’m going to leave the commission in a month, and I would never have left if this was undone. … We weren’t going anywhere until it was finished.”
But Powell noted that the job is not complete, that all involved have only “earned the right to do the hard part” — the three-year rebanding process that the Transition Administrator will oversee (see First Responder Communications, March 2005).
Under the revised order, Nextel is required to pay $2.8 billion in cash. The first priority for that money is to pay for rebanding, but any leftover funds are earmarked for the U.S. Treasury. Nextel Senior Vice President and Chief Regulatory Officer Robert Foosaner predicted that the U.S. Treasury would be receiving a payment.
Foosaner also said he believes rebanding will solve the interference problem, bluntly answering a reporter’s question regarding what will happen if there is any interference to public-safety communications after rebanding is completed.
“I think the commission has demonstrated they’ll have our head,” Foosaner said. “The commission sent a very loud message here. They’re not going to tolerate interference to public safety.”
Although Nextel waited until the last possible day to make the announcement, the decision was hardly a surprise. At the Association of Public-Safety Communications Officials Winter Summit the previous week, it was revealed that the wireless carrier already had negotiated rebanding agreements with some 800 MHz users. In addition, Nextel faced substantial political and public-relations backlash — not to mention more stringent interference rules — if it declined to reband, especially after the FCC granted many of concessions Nextel sought in a revised order.
Nextel spokesman Tim O’Regan said his company made the decision independently, but most observers said the wireless operator’s merger announcement with Sprint effectively sealed Nextel’s commitment to rebanding.
Nextel’s current interleaved spectrum would be of little use to Sprint’s future broadband wireless plans. However, the contiguous spectrum Nextel will receive at 800 MHz and especially 1.9 GHz — the location of Sprint’s airwaves — through the rebanding deal caused the merger to make sense.
“I think there was always an understanding that Nextel would [accept the rebanding order,]” said Roger Entner, director of wireless/mobile service for The Yankee Group. “I don’t think it was ever contemplated that they wouldn’t do it.”
Nextel’s O’Regan said shareholders for Sprint and Nextel are expected to vote on the merger this spring, probably in May. When the merger was announced in December, many analysts predicted Verizon Communications would pre-empt the Sprint/Nextel deal with its own bid for Sprint, which uses the same CDMA technology as Verizon in the wireless space.
“I was surprised [Verizon] didn’t [bid for Sprint],” Michael Grossi, Adventis vice president, said.
However, Grossi said he no longer believes Verizon — which has bid $6.8 billion for long-distance carrier MCI — will attempt to buy Sprint. Not only is Verizon Wireless confident in its ability to grow organically, consolidation with Sprint could complicate parent Verizon’s efforts to lobby Congress for deregulation of its wireline business, Grossi said.
In addition, Entner said the prospect of a Verizon/Sprint would leave the U.S. wireless landscape with two huge nationwide carriers — Baby Bell-owned Verizon and Cingular — and two smaller nationwide carriers — T-Mobile and Nextel. While a Sprint/Nextel merger would create competition between three large nationwide wireless operators, getting regulators to approve a Verizon/Sprint deal “would be a bloody mess,” Entner said.