WASHINGTON-The Federal Communications Commission late Wednesday said the spectrum Nextel Communications Inc. is giving up as part of the FCC’s 800 MHz band retuning plan is worth $452 million more that its original estimate. The action means that after the rebanding process is complete, Nextel will be credited with $2.059 billion plus the cost of retuning. If these two amounts do not equal $4.86 billion, Nextel will be required to make a payment to the U.S. Treasury, something it sought to avoid.
The $4.86 billion amount is the valuation the FCC placed on PCS spectrum in the G-Block Nextel receives as part of the plan. The FCC is modifying Nextel’s current licenses to include spectrum in both the 800 MHz band and the 1.9 GHz band.
The $452 million additional credit was proposed by Nextel after it gave detailed information to the FCC regarding its spectrum holdings as it fought to revise the original $1.607 billion spectrum valuation.
“We note that Nextel’s revised analysis does not always work in its favor. For example, it results in a lower value for some categories (interleaved SMR channels) than Nextel was credited for in the original plan, while the offsetting valuation of other categories (GX channels, interleaved non-SMR channels) is higher,” said the FCC.
FCC Commissioner Michael Copps expressed concern with the 20-percent valuation increase.
“While I believe that Nextel has demonstrated that its spectrum holdings are different than the assumption we made in the original order, I am concerned that the process that the FCC has used here to determine value has become too imprecise. Given the short time available, I do not believe that the commission had the capacity to independently pinpoint the exact nature of Nextel’s holdings, as we do here but did not do in the previous order. Additionally, if we must reassess the value of Nextel’s spectrum, I would have preferred to reassess the megahertz per pop multiplier that we employ in light of changes in the marketplace and transactions that occurred after we adopted our first order,” said Copps.
FCC Commissioner Jonathan Adelstein highlighted another significant change-the FCC will now allow non-Nextel economic-area licensees that wish to, but have not yet, deployed cellular systems the opportunity to do so under certain conditions.
“We also provide an opportunity to EA licensees who presently do not meet the ESMR definition but are interested in operating an ESMR system in the above-862 MHz band. These licensees can choose to move to the ESMR band and retain the ‘white space’ they currently hold through their EA license provided they are willing to operate a cellular system in the band pursuant to technical rules clarified in this item. In the alternative, these EA licensees can remain in the band below 862 MHz and operate ‘high-site’ systems. The choice is theirs, and that is the right outcome of this proceeding,” said Adelstein.
The conditions, however, do not appear to be acceptable to one non-Nextel EA.
“Preferred is extremely disappointed that the FCC has chosen to ignore its statutory-mandated obligations to maintain regulatory parity and promote diversity of license ownership and competition among SMR licensees,” said Charles (Matt) Austin, president of Preferred Communication Systems Inc. “By openly discriminating against non-Nextel EA licensees on the basis of the present construction status of their spectrum holdings, the FCC has ensured that the rebanding proceeding will be subject to litigation, further delaying the resolution of interference in the 800 MHz band.”
Nextel has agreed to merge with Sprint Corp. but FCC Chairman Michael Powell said he has been assured that the proposed merger will have no impact on the 800 MHz rebanding plan. Nextel is scheduled to either accept or reject the plan as clarified by Feb. 7.
The FCC in July adopted a plan to solve the interference problem, swap some spectrum with Nextel and have Nextel pay to move other companies off the spectrum Nextel would receive. The FCC released the text of the plan in early August. The clarification is another 67 pages.
