dailywireless.org » FCC: Nextel Gets PCS Spectrum

FCC: Nextel Gets PCS Spectrum

The FCC voted 5-0 today for a Consensus Plan (pdf) whereby Nextel would receive airwaves in the 1.9 Gigahertz band in exchange for returning other airwaves, including portions of the 700 and 800 Megahertz band near public safety bands, report USA Today, Reuters, Internet News, and other sources

Nextel will give up rights to some of its 800 MHz licenses and all of its 700 MHz licenses. In exchange, Nextel will get spectrum in 5 MHz chunks at 1910-1915 and 1990-1995 MHz. The commission valued Nextel’s spectrum at $4.8 billion, less the cost of relocating thousands of public safety organizations, said John Muleta, FCC wireless telecommunications bureau chief, in a press briefing after today’s vote. Nextel would have to line up a $2.5 billion letter of credit to ensure emergency service providers were moved. That would be $1.3 billion to $1.5 billion more than Nextel had recently proposed.

The Deal
Under the agreement, public service agencies will gain use of the 700 and 800 Mhz bands currently operated by Nextel that were causing interference. Nextel will exchange 16 megahertz of spectrum spread around the 700 MHz, 800 MHz and 900 MHz bands for 6 megahertz in the 800 MHz band and 10 megahertz in the 1.9 GHz band. Nextel will then have 16 megahertz of contiguous spectrum in the 800 MHz band, on which the carrier could continue to offer its voice service, and 10 megahertz in the 1.9 GHz band to offer “4G” services in the future. Nextel would then have a total of 26MHz, about what it has now, but allocated differently to avoid interference and consolidate their spectrum bands in 800 Mhz and 1.9Mhz.

The move will be completed over 42 months. The first nine months will be dedicated to frequency planning and data collection. The movement of the largest public safety systems would occur in the final stages.

Critics and industry observers say it would be a great windfall for the No. 5 player, giving it a heaping helping of network capacity. It prompted an outcry from Verizon Wireless, which has urged the FCC to auction off the spectrum. Earlier this year, Molly Feldman, Verizon Wireless’ vice president for business development, wrote to commissioners saying that an auction is the only way to obtain fair market value.

“There is absolutely no justification for squandering such a valuable asset by giving it away to Nextel or anyone else through a ‘private sale’” she wrote. In a press release issued during the FCC’s deliberations, Verizon Wireless was even more caustic, charging that Nextel’s deal amounts to a “multi-billion-dollar give-away.”

The CTIA backs the large cellular carriers opining that interference problems should be fixed at the local level using standard engineering techniques at the expense of the interfering carrier [although it has sometimes proved ineffective]. “The Balanced Approach” plan (Fix800MHzNow.com) has CTIA’s pitch while “The Consensus Plan” (consensusplan.org) has the pitch from public service operators favoring the swap. The FCC has the authority to assign spectrum if it is in the public interest.

The Consumer Federation liked the FCC’s decision. According to CF spokesman Mark Cooper, the decision ‘gets the job done. It sorts out the public safety issues and keeps Nextel as a viable competitor’ in a market being dominated by companies such as Verizon.

The 1900 MHz PCS Band
There are 6 bands in the 1900 Mhz range for PCS. The FCC divided the PCS band into six licensing blocks (designated as “A” through “F”) based on Rand McNally major trading areas (MTAs) and basic trading areas (BTAs) for two 30 MHz MTA, one 30 MHz BTA, and three 10 MHz BTA licenses.

The 6 PCS bands (A, B, C, D, E & F) are not all used. The “C” band, for example, was orginally bid by NextWave and re-auctioned. Verizon Wireless just paid $930 million for 10 MHz in the 1.9 GHz PCS frequency range for the New York Basic Trading Area which covers a population of 20 million people. Meanwhile the smaller (10 MHz), D, E and F bands are often available in smaller communities.

Building a 3G network from scratch can cost more than $50 per pop with most of the money needed for cell site construction and non-spectrum-related expenses. The FCC sold some C block and F block licenses in January, 2001, raising a record $16.86 billion. Verizon spent $8.78 billion for 113 licenses, winning two each in key markets such as New York and Boston.

The Interference Issue
Nextel interference, it might be said, was the FCC’s fault. They thought the ajoining frequencies would not cause interference, even if cell towers were near low-power police radios using adjacent frequencies. They were mistaken. Here are some interference problems that have been observed.

Nextel’s authorized cellular channels, ajoining public service frequencies, wasn’t a problem at first. Then Nextel cell towers began to proliferate. When a Nextel tower is very close, it can swamp police and fire radios because most public service radio towers are miles away on a distant hill. Cellular companies generally use frequencies that are further separated so they don’t cause interference. Nextel was grandfathered in and started as a taxi dispatch radio service using ajoining frequencies.

Interference History
The public safety interference problem first surfaced in 1999 in Portland, Ore., and Phoenix. It occurred largely because Nextel carries its phone calls on frequencies that interweave with those used by fire and public safety communications systems — the result of its purchases of old radio frequencies at the time it formed its cellular network. Some public safety groups say an unofficial tally indicated between 750 and 1,000 emergency communications nationally have been blocked or subjected to interference.

The situation in Oregon came to a head during the 2001 Oregon Legislature when a bill drafted by Sen. Rick Metsger, D-Mount Hood, brought together metro-area public safety officials and representatives of the wireless communications industry in an effort to find a solution. Their plan to resolve the problem, is now the basis for a national proposal known as the “Consensus Plan.”

In 2002, Nextel and public safety groups filed the “Consensus Plan” with the FCC in which Nextel proposed to pay $550 million — which it later increased to $850 million — to untangle its airwaves from public safety and other private users of the 800-megahertz frequency where those groups operate.

Interference problems are just getting worse. In Portland, officers chasing a suspected carjacker fanned out to surround him — until their radios went dead. Several had to borrow telephones from nearby homeowners to call dispatch. In Anne Arundel County, Md., a deputy sheriff was forced to drive blocks away from a burning home to tell headquarters about the fire because his radio suddenly stopped transmitting. And police in Denver have identified 24 “dead spots” where radios fall silent or get tangled in unintelligible static.

The Oregonian reviews some interference problems in Portland.

Joe Kuran, a radio technician at Washington County’s 9-1-1 center in Beaverton, was among the first to alert federal regulators to the interference.
In a letter to the FCC in November 1998, Kuran wrote that a Nextel antenna near the Washington Square shopping center blocked firefighter radio communications.
More than a year later, an FCC official wrote back, saying no one had violated federal rules and that the 9-1-1 center and Nextel should resolve the conflict on their own.
Yet the interference persisted. Among the incidents: Denver police officers on a drug surveillance in June 2001 witnessed a shooting but couldn’t call for backup until they ran for a block; and Portland officers in April 2001 lost radio connection as they rushed to a reported burglary near the airport.
As the incidents continued, Nextel proposed a solution to the FCC in fall 2001 that would have provided $500 million for public safety agencies to retrofit their radios.
Wireless phone companies, public safety groups and others peppered the FCC with more than 2,300 comments and suggestions over the next 21/2 years.

Three of the five commissioners — Chairman Michael K. Powell, Kevin J. Martin, and Michael J. Copps — voted in favor of the plan earlier, but many aspects of the proposal, including the method and exactly how much Nextel would pay were not settled — until today.

Nextel’s rivals claim the proposal would effectively give away a scarce public resource that is worth at least $1 billion more than what Nextel offered. Other than Verizon Wireless, Nextel has had little opposition to the plan except from the Cellular Telecommunications & Internet Association. They argued Nextel should pay more and get less-valuable airwaves in the 2.1 gigahertz range.

Of course, a spectrum auction wouldn’t solve interference issues. It would have to include funds to move incumbants - which is what the FCC did with the Nextel plan announced today.

Nextel’s 2.6 GHz Spectrum
Nextel also owns big chunks of the licensed 2.5-2.7 MHZ (MMDS) band (below) in the United States. The MMDS band, which has recently been re-allocated itself, was not a part of this Nextel frequency swap. But it could be a part on Nextel’s future plans.

According to papers by Wi-Max supporter NextNet, the average carrier to noise at cell fringe for an MMDS (2.6 GHz) footprint can be equal to or somewhat greater than PCS systems at 1.9 GHz. But with 802.16/802.20 standards, service may be faster and cheaper than “3G” cellular, providing voice, video and 1 Mbps mobile data. If Nextel DOESN’T go with Flarion or 802.20 at 2.6 GHz (and possibly 1.9 GHz), it would surprise many industry observers. That appears to be Nextel’s thrust.

Legal Challenge?
Verizon threatened to sue FCC commissioners personally to prevent the 1.9 GHz Nextel spectrum swap.

“We’re not afraid of litigation, and the commission shouldn’t be, either, said Bob Gurss, director of government affairs for the Association of Public-Safety Communications Officials International (APCO). Every day we delay is another day people are at risk. The FCC shouldn’t be scared off by threats of litigation. They need to decide to do what they know is right“.

An Opinion

The decision announced today by the FCC seems like a reasonable compromise. It provides a solution to interference (for public service users), provides competiton (for consumers), and won’t be too destabilizing (pleasing conservatives).

Verizon could afford to “buy-out” Nextel’s PCS spectrum and “take out” a competitor. Now they can’t.

Verizon can claim a partial victory — they increased Nextel’s cost of doing business. Nextel, after all, didn’t accumulate more frequencies, it just shifted their existing 26Mhz to prevent interference. Nextel is paying good money moving everyone around because of the FCC’s error. Their subscribers will pay for it.

It’s not fair but at least it’s a solution.

Verizon used to do PR with subtlety and sophistication. Now they’re cellular’s junkyard dog. But a merged Cingular/ATT, Nextel/T-Mobile, Sprint/Verizon, Comcast/Nextnet, SBC/Qwest, driven by maximizing quarterly earnings, isn’t a better solution.

Consumers hold the cards to the unlicensed band. That’s the ticket for broadband ubiquity and economic vitality.

- Sam Churchill