Subject: [NEXTEL-1] FCC Staff Endorses Nextel Scam Plan

From: Marcelrf <[email-masked]>
Date: Tue, 09 Mar 2004 21:02:55 -0500

FCC Staff Endorses Nextel Scam Plan
Tuesday March 9, 8:37 pm ET 
By Mark Wigfield 

WASHINGTON -- Staff at the Federal Communications Commission (News -
Websites) has endorsed a concept touted by Nextel Communications Inc.
(NasdaqNM:NXTL - News) that would result in the company getting
valuable new spectrum in return for protecting protect police and fire
radios from interference by the growing wireless company.

But Nextel could potentially pay more than the $850 million it
originally proposed to do the job. The company would be required to
sign off on an open- ended commitment to pick up the tab for moving
public safety radio to interference-free zones within the 800
Megahertz range of the radio spectrum.

And the FCC staff has rejected Nextel's proposal to throw some
less-valuable airwaves into the trading mix, focusing instead on the
value of what Nextel will give up in the 800 MHz and what it will gain
in the valuable 1.9 Gigahertz range.

At the same time, the staff rejected a proposal by Verizon
Communications (NYSE:VZ - News) Inc. (VZ) that would have simply
required Nextel to reorganize the 800 MHz spectrum band to protect
emergency responder radios without providing the company with 10 Mhz
of new spectrum in the 1.9 GHz range. Verizon had proposed auctioning
the highly sought 1.9 GHz airwaves, and using the proceeds to pay the
cost of altering emergency radios to use new frequencies in the 800
MHz band.

The staff plan doesn't specify exactly what Nextel must pay. But
officials says Nextel must agree to complete the public safety radio
transition completely.

In analyzing the cost, the proposal mirrors a range laid out in an
analysis by Legg Mason Wood Walker Inc.

Verizon Wireless has calculated that Nextel will receive a $6.5
billion windfall in the spectrum swap it has proposed. Nextel says it
will lose $1.1 billion when the cost of the spectrum it is
relinquishing and the relocation payments are tallied.

Legg Mason's Blair Levin concluded that the value of Nextel's spectrum
would increase by $2.8 billion in the swap.

The staff recommendation has now circulated the plan among the five
commissioners, who can change it before final approval.

Nextel couldn't be reached for immediate comment on the plan. But
Verizon Wireless spokesman Jeffrey Nelson said the staff proposal is
just a first step in what is likely to be an intense debate among the
commissioners.

"This now begins the discussion about options for improving law
enforcement communications," Mr. Nelson said. Verizon's auction plan
"accomplishes everything the public safety community requires,"
including a guaranteed fund to pay for the relocation.

Police and fire companies "won't have to petition a private company"
for funds, Mr. Nelson said. And the plan accomplishes its goal
"without a taxpayer- supported windfall" to Nextel.

But an FCC officials says it's unlikely the agency has the authority
to simply evict Nextel from its airwaves without offering something in
return. Moreover, Nextel is the only company that has made a firm
commitment to complete one of the FCC's top priorities: protecting
emergency radio services from disruption by reorganizing the 800 MHz
band.

"Verizon's commitment is to do an auction," an official said. And that
auction may or may not pay to reorganize the 800 MHz band.

Verizon's position is a shift from an earlier plan endorsed by the
wireless industry's trade association, the Cellular Telecommunications
and Internet Association (News - Websites) . That plan called for
handling interference problems within the 800 MHz band on a
case-by-case basis.

It was rejected by most public safety officials as inadequate. FCC
officials said the plan didn't solve interference problems for the
long term.

On Tuesday, Legg Mason reported "our understanding is that at least
four of the five offices have, as a preliminary matter, accepted the
need to make the 1.9 GHz spectrum available to Nextel, but at a price.
We do not know whether the draft order actually includes a dollar
amount for what the commission seeks from Nextel to compensate for the
greater value of the spectrum it will receive."

An FCC official said the cost is "still in flux," and that many
elements of the staff proposal will change as the FCC deliberates.

Nextel's roots as a radio dispatch company have been a mixed blessing
as it has grown into a major wireless carrier.

On the one hand, the company capitalized on its past with a unique
"direct- connect" feature that enables customers to use their phones
like walkie-talkies. Verizon also now offers a similar feature.

On the other hand, the company's use of the 800 MHz spectrum is
increasingly knocking emergency communications off the air.

Police and fire officials have grown vocal about interference from
Nextel phones, and have mounted a lobbying and public relations
campaign to resolve the matter. The campaign has been funded in part
by Nextel.

-By Mark Wigfield, Dow Jones Newswires; 202-828-3397;
[email-masked] 

http://biz.yahoo.com/djus/040309/2037001122_1.html

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