FCC to rule on billion-dollar spectrum giveaway

A battle royal over spectrum is heating up once more in the cellular industry with Nextel Communications on one side and Verizon Wireless taking a leadership position representing most of the other wireless carriers on the other side.

The faceoff is over how best to resolve the problem of interference with the pubic safety wireless network and the value of the 1.9GHz band.

At stake is what Verizon spokesman Jeffrey Nelson called the “beachfront property of spectrum real estate [1.9GHz].”

The history of the controversy goes back to Nextel’s roots when it cobbled together a national service based within the 800Mhz to 900MHz spectrum, part of which was also used by public safety agencies.

While at first public safety and Nextel operated amicably, portions or strands of spectrum in this space were far enough apart that as Nextel’s subscriber base grew and the growth in radio communications by public safety increased, Nextel subscribers and public safety users started interfering with one another.

The first salvo was fired in November 2001 when Nextel introduced its Consensus Plan. The carrier in effect showed up at the FCC with a list of problem areas and suggested that Nextel and public safety be allowed to re-band within the spectrum in contiguous strands which would greatly reduce any overlap. At the same time, Nextel asked for additional spectrum, now in the 1.9GHz space.

After almost three years, the FCC is now near a decision on the Consensus Plan and the opposition is crying foul.

For its part, Verizon says if the FCC rules in favor of Nextel, it amounts to a multibillion dollar giveaway to a private company.

According to Nelson at Verizon,  the 1.9-MHz band is desirable because it is in close spectrum proximity to what most wireless network providers have now, thus giving any owner of this part of the bandwidth the ability to upgrade their current 3G services without the need to replace either cell towers or handsets.

Verizon, using spectrum appraisers Kane Reece, is also claiming that re-banding of the 800MHz spectrum alone is worth $2 billion dollars to Nextel and the 1.9GHHz spectrum worth somewhere between $5 and $7 billion dollars.

In order to short-circuit any decision by the FCC in favor of Nextel, Verizon announced this week that if the 1.9GHz spectrum was publicly auctioned its opening bid would be $5 billion.

The CTIA (Cellular Telecommunications & Internet Association) is also weighing in, citing among other things the Telecommunications Act, section 309J.

“It is crystal clear, spectrum used for wireless services should be sold at competitive auction,” said Travis Larson, a CTIA spokesman.

The organization has come up with a counterproposal dubbed the Balanced Approach Plan. Backed by more than 100 organizations, including state and city governments as well as public safety agencies, the plan seeks to solve the problem at the local level.

“The nationwide re-banding Consensus Plan takes a minimum of three-and-one-half years to start to solve the problem, and that is much too long to put public safety lives on the line,” said Travis.

Travis added it could cost billions of dollars to fix the problem on a national level when some states, such as South Carolina, experience no interference problems whatsoever.

The CTIA believes that as interference problems are reported the FCC should require that at the local level standard engineering techniques be used to fix the problem at the expense of the interfering carrier.  

The Balanced Approach Plan also suggests that carriers create a system to test new communications facilities before they are turned on in order to make sure that they do not create new interference.

Larson said an FCC ruling is expected shortly but would not guess as to when that would occur.

Among backers of the Balanced Approach Plan are the states of South Carolina and Pennsylvania and the cities of Baltimore, Philadelphia, San Diego, and Mariposa County, Ariz., which includes Phoenix.