Analyst: 800 MHz decision imminent

FCC officials are expected to decide how to resolve interference created by commercial wireless carrier Nextel Communications in the 800 MHz public-safety band during the FCC’s April 15 meeting, if not sooner, according to one analyst.

Rudy Baca, wireless strategist for Precursor and a former employee of the FCC’s Wireless Bureau, said the FCC’s April meeting is a "backstop" for a ruling, but there is a very good chance that the decision will be made on a circulation basis prior to the open meeting.

"The White House said, ‘This is a priority,’ so it’s going to get done," Baca said.

A draft ruling being circulated among commissioners is based largely on the Consensus Plan, which calls for rebanding within the 800 MHz frequencies and Nextel getting 10 MHz of spectrum at 1.9 GHz. In return, Nextel has said it would pay $850 million to fund the retuning of the radios for the entities that would be moved.

Baca said his sources indicate Nextel will have to pay for the 1.9 GHz spectrum—at a cost of between $3 billion and $7.2 billion— in addition to Nextel’s $850 million commitment to pay for retuning, he said. However, Verizon Wireless and other commercial wireless operators have long contended that the law requires the spectrum at 1.9 GHz to be auctioned, and "I don’t know how the FCC gets around that," Baca said.

With this in mind, there’s little doubt the issue will be taken to court. In fact, Baca recently wrote a report that states it "is highly likely (75%) the reviewing court will overturn the FCC’s decision and require an auction." In addition to legal questions, Congress will apply considerable pressure for an auction, the proceeds of which would help address federal budget issues, Baca said.

The fear for public-safety officials has been that the 800 MHz issues would be dragged into litigation as well, which could delay rebanding for at least an additional year. Baca said he doubts that will occur; instead, he believes any judges hearing the case will separate the issues—allowing the 800 MHz rebanding to proceed while presiding over the 1.9 GHz debate.

"God forbid, if we have another 9/11, no judge wants the story to say, ‘Judge So-and-So blocked a plan that would have solved the interference problems,’" that resulted in people dying during such a tragedy, Baca said.

However, that scenario is "net bad news" for Nextel, which likely would remain responsible for paying at least $850 million for 800 MHz rebanding without knowing whether it would ever receive 1.9 GHz airwaves, Baca said. That prospect makes the deal much less attractive for Nextel, which had hoped to receive 1.9 GHz spectrum at no extra cost to roll out its Flarion high-data-rate technology to compete with the 3G services being offered by its competitors.

Placing a short-term value on the proposed deal is difficult, but placing a long-term value is even more difficult. Although Nextel has one of the most attractive customer bases in the industry, the company has never been a serious consolidation target, because its interleaved 800 MHz spectrum is almost useless to other wireless carriers. If Nextel can reach a deal that would give it contiguous spectrum at 800 MHz and 1.9 GHz, expect several suitors to make bids to buy the wireless carrier in upcoming years, Baca said.

"I’ve thought Nextel’s been dressing itself up for the takeout prom for some time now," he said. "If they could get cleaned-up spectrum at 800 MHz, keep its push-to-talk—something the others can’t match—and have some spectrum at 1.9 GHz, then Nextel starts looking pretty."