Subject: [NEXTEL-1] FCC's 800 MHz BAND DRAFT ORDER COULD UNDERGO MAJOR CHANGES FCC

From: Marcelrf <[email-masked]>
Date: Wed, 10 Mar 2004 21:19:08 -0500

FCC's 800 MHz BAND DRAFT ORDER COULD UNDERGO MAJOR CHANGES FCC

Sources cautioned today that a draft order circulated yesterday in the
agency's 800 megahertz band proceeding could change substantially before
Commissioners adopt the item. One source described the document as being
a "starting off point for further discussions" among Commissioners'
offices. "No one's ready to commit right now," the source said.

Agency sources said officials hoped Commissioners would be ready to vote
on the item at their April 15 meeting. Several sources scoffed at a
brief research note released late yesterday that said "at least four of
the five offices have, as a preliminary matter, accepted the need to
make the 1.9 [gigahertz] spectrum available to Nextel, but at a price."

"I find it very doubtful that Commissioners have agreed to anything,"
another source said. "There's not an agreement on anything. . . .
There's going to be some kind of rebanding, but beyond that, I think
it's all up in the air." Sources said other than possibly Chairman
Michael K. Powell, the other four Commissioners had not yet decided
whether to support granting Nextel the 1.9 GHz band frequencies.

An agency source said the draft order included components of both a
"consensus" plan and a rival "balanced approach" proposal. The source
added that neither of those plans had met all of the agency's objectives
in the proceeding. "We needed something that was end-to- end complete,"
the source added. The 156-page order calls for Nextel Communications,
Inc., to receive 10 MHz of spectrum in the 1.9 gigahertz band as part of
a realignment of the 800 MHz band to address commercial interference to
public safety systems, sources said. Nextel has pledged to pay $850
million to cover the relocation costs of public safety and private
wireless licensees under the consensus plan that is also backed by major
public safety organizations and private wireless licensees.

Under that plan, Nextel would swap spectrum in the 700 MHz, 800 MHz, and
900 MHz bands in exchange for the 1.9 GHz band channels. The proposal in
the draft order doesn't involve the 700 MHz and 900 MHz bands, sources
said. Under the plan spelled out in the draft order, Nextel would be
responsible for picking up any additional costs in excess of $850
million. The carrier also would have to pay the difference between those
costs and the value of the 1.9 GHz band spectrum, sources said. The
draft order cites varying estimates of how much the 1.9 GHz band
spectrum is worth and suggests the agency settle on the "midpoint" of a
"relatively narrow" range, sources said.

"Ultimately, the Commission needs to make a decision on what the number
is," said a source close to the proceeding, predicting there would be
"back and forth between the Commissioners" on the amount.

The source added that Commissioners must determine whether the Wireless
Telecommunications Bureau used an "appropriate methodology" for arriving
at its valuation, and whether they agree with all of the underlying
assumptions used. "We want the Commission to think through the process
so it's not arbitrary and capricious," the source added. Another source
stressed that the agency wasn't relying on outside estimates. "We've
done our own economic and engineering analysis for all of this," the
source said. "We're not taking it on faith."

The valuation of those 1.9 GHz band frequencies has been the focus of
the proceeding in recent months. An analysis released by Verizon
Wireless in October estimated that the value of the 1.9 GHz band
spectrum was worth $5.3 billion and that Nextel's spectrum holdings
would increase by $7.2 billion under the consensus plan. Nextel
estimates the 1.9 GHz band spectrum is worth $3.5 billion; it says that
its spectral and financial obligations under the consensus plan are
worth more than $2 billion more than the 1.9 GHz band spectrum. In a
research note released late today, Legg Mason Wood Walker, Inc.,
estimated the net value of the draft order to Nextel at between $1.5
billion and $3.2 billion. At least until rebanding is completed, the
draft order envisions 800 MHz band licensees using concepts contained in
the balanced approach plan, which is backed by Nextel's competitors,
utilities, and some public safety licensees. That plan advocates the use
of "best practices" and technical rule changes to address incidences of
interference. "It does a lot of things to clarify when is there
interference taking place and who has to fix it and how," a source said
of the draft document. The order recommends giving licensees flexibility
to use a variety of tools to resolve interference, the source said.

A spokeswoman for Nextel said the carrier did not know what was in the
draft order but was pleased that Commissioners were considering the
document. She said the company couldn't comment on specific proposals
until it saw them. "We believe we are contributing a lot more than the
value of the spectrum we are getting," she said. "We believe it's more
than a fair exchange." Meanwhile, Nextel's opponents, which had backed
the balanced approach, said they would continue to press the FCC not to
grant Nextel any 1.9 GHz band frequencies, arguing that such a move
would represent a windfall for the carrier. Instead, the Commission
should auction the spectrum while forcing Nextel to pick up the costs of
realigning the 800 MHz band, they said. "This is the beginning of the
discussions by the Commissioners," said a spokesman for Verizon
Wireless, which along with Cingular Wireless LLC and AT&T Wireless
Services, Inc., opposes Nextel getting any 1.9 GHz band licenses. "We
are absolutely convinced that in-band realignment with prove to be the
best solution for law enforcement."

A public safety source sounded pleased with the draft order, saying the
recommendations would address interference while ensuring Nextel covers
all of the relocation costs. However, some utilities, led by the United
Telecom Council, have opposed any realignment of the 800 MHz band.
Sources said FCC staff decided that ordering Nextel to pay for the
relocation costs of public safety and private wireless licensees without
any spectrum compensation would amount to inequitable treatment of the
carrier.

They also said that suggestions that the Commission use 1.9 GHz band
auction proceeds to pay for public safety relocation was a non-starter
because auction proceeds go directly into the U.S. Treasury. One idea
discussed before the order was circulated was giving Nextel a voucher
for a future auction in exchange for its commitment to pay for the 800
retuning costs.

That proposal would not have granted the carrier any 1.9 GHz band
spectrum. Some sources said the idea could be discussed further among
Commissioners' offices. In its research report, Legg Mason predicted
that "lobbying will heat up considerably during this final stretch, and
we would expect to see additional pressure from Congress, probably on
both sides of the issue, as well as perhaps more creative strategies."

In the end, there's a chance the Commission "may decide to reject this
very complex proposal in favor of the litigation risk presented by
ordering Nextel to fund the rebanding itself or resetting the
interference standards in a way that gives greater protection to public
safety. We do not believe this is a likely scenario at this time, but
cannot dismiss it altogether." - Paul Kirby, [email-masked]

tr.com

--
    "NEXTEL-1 IT'S NOT JUST NEXTEL"
  Note The New address
Subscribe to Nextel-1: http://www.groups.yahoo.com/subscribe/NEXTEL-1

  "NEXTEL2 FOR iDEN SOFTWARE DEVELOPERS"
Subscribe to Nextel2: http://www.groups.yahoo.com/subscribe/NEXTEL2

  "WIRELESS FORUM HOMELAND SECURITY GROUP"
     The Complete Resource for Wireless Homeland Security.
Subscribe to WFHSG:  http://www.groups.yahoo.com/subscribe/WFHSG

---

From: [email-masked]
Date: Thu, 11 Mar 2004 00:15:52 EST

Go, Penn, Go!