Wireless Spectrum Auctions

Reacting to arguments by critics, Nextel told the FCC Fri. that instead of a “windfall” from the “consensus plan” for 800 MHz, its commitments under the plan would be at least $2 billion more than spectrum benefits it would receive. Nextel Vp-Govt. Affairs Lawrence Krevor said Fri. the company hadn’t backed away from its previous position that it would pay only $850 million to relocate incumbents under the plan if key elements, including spectrum at 1.9 GHz, were included.

Acting NTIA Dir. Michael Gallagher told reporters Thurs. that recommendations on spectrum policy reform due at the White House May 29 were on track. Gallagher spoke in advance of a spectrum workshop in Santa Clara, Cal., Mon. to solicit industry feedback on spectrum policy reform. The Information Technology Industry Council and CEA are holding the forum with Gallagher with the private sector at Intel’s campus. NTIA has held recent forums in Washington to gather feedback for recommendations being drafted at the direction of an executive memorandum President Bush signed in May. He created a task force on stimulating more efficient spectrum use by federal operators. “We anticipate delivering 2 different action plans by May 29,” Gallagher said. Part of the debate has centered on how to measure the efficiency of govt. use of spectrum. “We have had a very active dialog and some would say debate among the agencies about what is the meaning of efficiency,” Gallagher said. He called it an important “foundational element” of the action plan. In the private sector, measures of spectrum efficiency are relatively straightforward, he said, noting the definition is typically bits per hertz per sq. km. While some have said measures of govt. efficiency of spectrum use can’t be directly defined in monetary terms, Gallagher said the debate had addressed how to come up with a gauge for agencies. The final output of the task force is likely to include significant recommendations on how to develop tools that make such measurements easier, he said. “Just because it’s hard doesn’t mean we shouldn’t do it or that we shouldn’t get as close as we can to our best judgment. In other areas, Gallagher in a Q&A stressed the importance to the Administration of spectrum relocation legislation that would reimburse govt. incumbents for relocating from spectrum to pave the way for advanced wireless services such as 3G. The spectrum relocation trust fund bill became bogged down in the Senate last year after the Northpoint amendment was added by Sen. Sununu (R-N.H.), which would require the FCC to give multichannel video distribution & data service (MVDDS) providers access to spectrum. The language was seen as a gift to Northpoint and was opposed by House and Senate Commerce Committee leaders. The FCC’s MVDDS auction ended in Jan. after 49 rounds. “The Northpoint amendment is what slowed things down in the Senate and that amendment is becoming less viable or less of a challenge as time goes on because the spectrum has been auctioned,” Gallagher noted. “Once the auction is officially closed the simple fact of that occurrence should go a long way toward mitigating the Northpoint concerns,” he said.

Citizens Against Govt. Waste (CAGW) weighed in against the “consensus plan” for fixing public safety interference at 800 MHz, telling Senate Commerce Committee Chmn. McCain (R- Ariz.) the plan subverted the auction process. In a letter Tues., CAGW asked McCain to urge FCC Chmn. Powell to reject the plan. The consensus plan -- backed by Nextel, the Assn. of Public Safety Communications Officials and others -- would realign spectrum at 700, 800, 900 MHz and 1.9 GHz. Nextel would give up spectrum in return for bands it would receive elsewhere, including 1.9 GHz. In part, the plan would give both it and public safety operators contiguous spectrum at different parts of 800 MHz. “The value of this contiguous spectrum [for Nextel] has been estimated to be worth as much as $7 billion and if sold at auction it would be a major win for taxpayers,” CAGW told McCain: “It is ironic that this plan would give Nextel nearly a $5 billion windfall to ‘correct’ an interference problem it caused in the first place.” Meanwhile, Cingular told the FCC in a filing Wed. it backed Verizon Wireless’s arguments that if the FCC decided to pursue an 800 MHz rebanding solution it should do so without including the 700 MHz, 900 MHz and 1.9 GHz bands. Cingular said these bands “have nothing to do with interference being experienced in the 800 MHz band. The Commission should reject Nextel’s ultimatum and, given the significant benefit to Nextel, require Nextel to pay for this in-band realignment.” Cingular didn’t go so far as Verizon Wireless did last week, however, when it said it would be willing to bid in an immediate auction of spectrum at 1.9 GHz (CD Feb 27 p1).

The United Telecom Council (UTC) reiterated its support for the so-called “balanced approach” for mitigating public safety interference at 800 MHz. Within several weeks, an item is expected to begin circulating on the 8th floor at the FCC on how to fix public safety interference problems at 800 MHz. Much of the public debate on the last few weeks has focused on the valuation of 10 MHz at 1.9 GHz that Nextel would receive as part of a spectrum reconfiguration plan backed by it, the Assn. of Public Safety Communications Officials and others. Last week, Verizon Wireless urged the FCC to not give Nextel this spectrum as part of the proposed exchange. Such spectrum should be auctioned, Verizon Wireless argued, telling the FCC it would participate in an auction of 1.9 GHz licenses. Nextel struck back last week, calling Verizon Wireless’s claims “specious and unfounded” (CD March 1 p7). UTC, CTIA and others have backed approaches based on best practices and other means rather than spectrum reconfiguration for fixing interference. “We must have an FCC decision that recognizes all the advancements being undertaken in the 800 MHz band, by public safety entities, utilities and others, one that offers flexibility to continue to expand systems and invest in new technology,” said UTC Vp- Gen. Counsel Jill Lyon. “The vast amount of money Nextel seems willing to spend here says volumes about who actually stands to gain the most.”

In response to stepped up wireless industry concerns over the “consensus plan” for 800 MHz last week (CD Feb 27 p1), Nextel called claims by Verizon Wireless “specious and unfounded.” Verizon Wireless told the FCC last week it would bid in an “immediate” auction of 1.9 GHz spectrum. This is among the bands that Nextel would receive under the consensus plan in exchange for giving up spectrum elsewhere to mitigate interference to public safety at 800 MHz. The plan is backed by the Assn. of Public Safety Communications Officials (APCO), PCIA and others. Verizon Wireless, in a letter to FCC Wireless Bureau Chief John Muleta, argued that public safety interference should be addressed by realigning the 800 MHz band without involving 1.9 GHz. CTIA and other wireless carriers have urged the FCC to consider alternatives to the consensus plan, including best practices measures for addressing interference. “For more than 2 years, CTIA, including its Bell-monopoly affiliated wireless members, have indulged in bullying tactics and spent millions of dollars lobbying to derail the consensus plan. They have pursued this agenda while offering no alternative to solve public safety radio interference and steadfastly working to divert attention from their own well-documented contributions to the problems of public safety interference,” Nextel said in a statement. “The failure to address this issue puts lives in danger every single day.” Countering what it said were misrepresentations about the value of the 1.9 GHz spectrum, Nextel disputed estimates that 10 MHz in this band is worth $7.2 billion. It said the highest amount ever bid for 10 MHz in this band was $3.3 billion in 1999, and that was never paid. “The highest amount ever received by the FCC for 10 MHz of spectrum at 1.9 GHz was in fact $1 billion,” it said. Nextel said that under the consensus plan, it would contribute 10.5 MHz of spectrum it had acquired since its founding. “Nextel was not a beneficiary in the FCC’s initial free spectrum allocations to the Regional Bell monopolies,” it said. In a letter to Congress members, the heads of APCO, the National Sheriffs’ Assn., the International Assn. of Chiefs of Police and the International Assn. of Fire Chiefs, said the consensus plan is “public safety’s plan.” Noting that some have characterized the proposal as crafted by Nextel for its own benefit, they said: “Nothing could be further from the truth.” Separately, Verizon Wireless late Thurs. submitted a more-detailed filing at the FCC outlining its concerns. “Removing the 1.9 GHz band from the consensus plan and auctioning it would allow the government (not a private party) to receive the substantial benefits that a nationwide block of clear, contiguous spectrum would bring at auction,” it said. Citing a legal memo prepared by Wiley Rein & Fielding, Verizon Wireless said it demonstrated the FCC had “full legal authority” to realign the 800 MHz band and direct Nextel to pay relocation expenses incurred by public safety licensees. The memo also said Nextel “can be made to pay the causally related ’second step’ relocation costs of the business and industrial users who would be moved as a direct result of Nextel’s relocation of the public safety licensees.”

In another run at opposing Nextel’s position on fixing public safety interference at 800 MHz, Verizon Wireless told the FCC Thurs. it was willing to bid in an “immediate” auction of spectrum at 1.9 GHz. This is among the bands Nextel would receive under a “consensus plan” proposal in exchange for giving up spectrum elsewhere. Meanwhile, 23 Republican and House members urged FCC Chmn. Powell not to give Nextel spectrum outside the 800 MHz band without conducting an auction under Sec. 309(j) of the Communications Act.

The FCC’s emphasis on VoIP is fine but the FCC should first make sure the underlying broadband infrastructure is deployed throughout the country, FCC Comr. Copps said Wed. at a symposium sponsored by Mich. State U.’s Quello Center. “No matter how enthusiastic the rhetoric [about VoIP], IP technologies will only reach their potential if the infrastructure is there,” he said. “We should be thinking larger thoughts,” Copps said: “If we ever needed a national conference on how to deal with disruptive technology it’s now.”

FCC Chmn. Powell expressed optimism Mon. technology could address the challenges of providing Enhanced 911 services on broadband networks offering VoIP applications. “We do have that rare opportunity to join hands and develop the solutions early, before our citizens and our consumers are using these services in overwhelming numbers,” he told a National Emergency Number Assn. (NENA) forum in Washington.

Verizon and Nextel officials pitched different ways Mon. to fix public safety interference at 800 MHz, in a N.Y. City Council Technology in Govt. Committee hearing. Nextel, with public safety groups and others, backs the “consensus plan” at the FCC, which would entail rebanding at 700, 800 and 900 MHz; Nextel would give up some spectrum in exchange for bands elsewhere, including 10 MHz at 1.9 GHz. Verizon Wireless and others, including CTIA, have criticized the consensus plan as providing a possible spectrum windfall to Nextel. They prefer establishing best practices to fix interference. At a hearing on spectrum for public safety Mon., Verizon Dir.-Spectrum/Wireless Policy Donald Brittingham told the committee the “most offensive part of Nextel’s proposal” was the spectrum swap that would result in a gain to Nextel of $6.5 billion. (Nextel has disputed the figure). “This includes new PCS spectrum in the 1.9 GHz band that could be auctioned to raise more than $5 billion for the U.S. Treasury -- revenues that could be used to provide first responders with state-of-the-art communications systems or to increase funding for critical homeland security needs,” Brittingham said in prepared testimony. “At a time when New York and other great cities around this country are in desperate need of homeland security funding, it is appalling that Nextel would make such a self-serving proposal or that the FCC would even consider its adoption.” Nextel Vp-Govt. Affairs Lawrence Krevor, in written testimony, said the consensus plan created separate spectrum blocks for public safety operators and the technology used by commercial carriers, eliminating the problem of interference caused by bad “spectrum neighbors.” He said: “In other words, the really great news about the consensus plan spectrum realignment is that it eliminates the interference to public safety radios before it occurs, not after it prevents a fire fighter from calling for help in an emergency,” Krevor said.

The FCC opened a comment cycle on a request by Nucentrix Spectrum Resources to assign certain licenses to Nextel. Petitions to deny are due March 22, oppositions April 1, and replies April 8. The companies are seeking FCC permission on the reassignment of MMDS, Wireless Communications Service, microwave and Cable TV Relay Service licenses from Nucentrix to Nextel. Nucentrix in Sept. filed for Chapter 11 protection in U.S. Bankruptcy Court, Dallas. In a court- supervised auction, Nextel submitted a winning bid of $51 million for certain Nucentrix assets, including spectrum and tower leases. “The applicants assert that grant of the instant applications would serve the public interest by allowing Nextel to increase its spectrum capacity and offer new digital wireless services to customers, including those customers in rural areas,” the FCC public notice said. The companies also argued the deal wouldn’t have an adverse effect on competition because Nucentrix and Nextel compete in different product markets. Nucentrix has told the FCC it plans to end its broadband data service in the 2nd quarter, providing customers with at least 90 days’ notice. Nextel has said that “pending the resolution of the Commission’s MDS and ITFS rulemaking proceeding, it will continue to provide the video programming services currently provided by Nucentrix DIP [Debtor in Possession] and by those ITFS licensees that rely on common links,” the notice said.