Spectrum Swap Plan Revisited

Reprinted with permission from washingtonpost.com and The Washington Post

The Federal Communications Commission is considering substituting a less valuable block of spectrum for what was previously proposed in a swap designed to minimize Nextel Communications Inc.'s radio interference with public-safety communications systems.

The Reston-based cellular carrier has offered to put up $850 million to rearrange positions with public-safety and other private wireless carriers around the country, but that plan has proved controversial with Nextel rivals, who say any swap involving new spectrum amounts to a "giveaway" of public resources.

The FCC, which has already voted to approve the broad outlines of Nextel's rearrangement plan, has proposed increasing the amount the company should pay. According to sources close to commissioners, the FCC is also considering other options, such as moving Nextel to a different frequency band.

In its original white paper filed with the FCC two and a half years ago, Nextel considered moving its cell-phone traffic to the 2.1 gigahertz airwaves, which the FCC now is considering for Nextel. But the FCC later presented the option of moving to the 1.9 gigahertz band, which is considered more desirable because it is closer to where other cellular carriers operate.

Also, most cellular equipment is already made to transmit in that range, and there are fewer existing occupants that would have to be moved to another band.

Verizon Wireless, the most vocal critic of Nextel's swap plan, would still object to giving Nextel any spectrum without allowing other carriers to bid in an auction, spokesman Jeffrey Nelson said.

Verizon Wireless valued the spectrum in the 1.9 gigahertz band that Nextel wants at more than $7 billion, and it offered a starting bid of $5 billion on that spectrum.

"I think [the FCC's] basic dilemma is that Nextel did a masterful job of forging an alliance with the public-safety community -- and now there's a widespread view that significant steps need to be taken to fix the interference problem," said Rebecca Arbogast, an analyst with Legg Mason Wood Walker.

To date, Nextel is the only party that has offered to resolve the interference with public-safety systems, she said, and Nextel can argue that any changes to its desired plan could delay the whole process.

Indeed, on Thursday evening, Nextel filed comments with the FCC objecting to a move to the 2.1 gigahertz spectrum, citing potential delays


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