WASHINGTON-Sprint Corp. urged the Federal Communications Commission to refrain from getting involved in a controversial business arrangement it has with US Unwired Inc., an affiliated rural carrier that has asked regulators to condition any approval of the proposed $35 billion Sprint-Nextel Communications Inc. merger on the divestiture of wireless properties at issue in the contract dispute.
“Consistent with long-established practice and precedent, the commission should decline to intervene in this private contractual disagreement,” said Sprint in a July 10 filing.
US Unwired claimed that because the original agreement includes all spectrum bands, the exclusivity provision will be violated by Nextel’s and its affiliate Nextel Partners Inc.’s use of the 800 MHz spectrum bands in US Unwired’s markets. US Unwired also claimed that Nextel’s and Nextel Partners’ current coverage overlaps at least 86 percent of US Unwired’s network.
Nextel, according to US Unwired, has stated plans to migrate its customer base to the 1900 MHz spectrum band, which it contends will further violate terms of its agreement. Nextel is in the process of exchanging some 800 MHz frequencies for 1900 MHz radio channels as part of an FCC spectrum reallocation plan to remedy interference to 800 MHz public-safety communications.
US Unwired also asserted Sprint is not making a serious effort to deal in good faith.
Sprint told the FCC the allegation is untrue.
“Contrary to the implications of US Unwired’s advocacy, Sprint takes seriously this dispute and, more generally, its agreements with its affiliate providers of Sprint wireless services,” the carrier stated. “Sprint is currently in discussion with each of its affiliates to develop a mutually acceptable solution for all parties in association with the pending merger of Sprint and Nextel. Sprint contemplates that the US Unwired matter will be resolved in accordance with the normal mechanisms for dealing with commercial disputes.”
Meantime, Community Technology Centers’ Network said information and data recently supplied by Sprint and Nextel to the FCC underscores the group’s call for Sprint and Nextel to sell 2.5 GHz broadband spectrum holdings as a prerequisite for merger approval.
“The merged entity would control too much of the 2.5 GHz spectrum in most of the major market areas of the top 50 BTAs [basic trading areas] to allow for effective competition in the fledgling wireless broadband market,” CTCNet told the FCC. The group added: “Allowing Sprint and Nextel to merge into an entity with sufficient spectrum to effectively exclude any competition in the 2.5 GHz band for years to come will only further encourage the anti-competitive behavior displayed to date, and is therefore directly contrary to the public interest.”
Sprint and Nextel told the FCC that while their combined 2.5 GHz licenses and leases would create a national footprint, each firm’s wireless broadband holdings largely complement one another and do not give rise to market power in a band currently being realigned and readied for largely unproven wireless technologies.
CTCNet-whose aggressive campaign on the 2.5 GHz issue has raised questions about the organization’s motives and backing-accused Sprint and Nextel of dodging the FCC’s request for a broadband wireless deployment timeframe. CTCNet said Sprint’s and Nextel’s responses to FCC interrogatories confirms that the two carriers have no plans to roll out high-speed wireless Internet services in the near future.
“Clearly, the best way for the commission to encourage Sprint and Nextel to actually do something with their warehoused spectrum is to free some of this fallow spectrum for competitors who would utilize it to build new wireless broadband networks today,” said CTCNet. “In this manner, the commission will guarantee competitive regional and national services in the new wireless broadband services industry will be made available to the public quickly. Given the commission’s mandate to facilitate competition and investment in wireless broadband technologies, the public interest demands nothing less.”
Last week, Sprint and Nextel lawyers met with Samuel Feder, an aide to FCC Chairman Kevin Martin, and officials from the Wireless Telecommunications Bureau, the Wireline Competition Bureau and the Office of General Counsel. During the meeting, according to a summary filed by Nextel, lawyers for the No. 3 and No. 5 wireless phone firms reiterated their requests for expedited approval of the deal. Sprint and Nextel also said they shortly would supply agency staff with additional information to supplement answers previously provided on questions such as whether the merger could lead to higher prices for consumers and why Sprint PCS and Nextel say their wireless offerings are not close substitutes for each other.
