WASHINGTON—Timothy Donahue, chief executive officer of Nextel Communications Inc., said Thursday morning Nextel finds nothing in the Federal Communications Commission plan that it opposes and believes that the issues it has been discussing with the FCC can be handled through an “erratum.”
By deploying an erratum strategy, Nextel is hoping that the FCC will make changes without seeking public comment.
“With something that is this complex, it is just not unusual for there to be some fine-tuning, and the FCC has a number of tools at its disposal for this purpose,” said Lauren Patrich, special counsel for media relations for the FCC’s Wireless Telecommunications Bureau. “Some fine-tuning can be done by an erratum or a clarification, and some issues the FCC may choose to address in a reconsideration on its own motion, and some issues may be brought to the FCC in a petition on reconsideration. Beyond this, there is always the court of appeals. At this point, I can’t speculate on what issues the FCC will choose to address and what means it will use to do it.”
Nextel late Tuesday confirmed that it wants to reduce the amount of money it would owe to the treasury as part of the FCC’s plan to solve public-safety interference in the 800 MHz band. It appears Nextel’s strategy is to get the FCC to clarify issues before Federal Register publication. If the FCC chooses this route, it could mean the public does not have an opportunity to weigh in.
In a filing earlier this week, Nextel asked that its spectrum valuation be used instead of the FCC’s valuation.
“Applying the FCC’s valuation formula using Nextel’s current more granular spectrum totals and accurate population coverage yields an 800 MHz spectrum value credit of $2.059 billion—an increase of $452 million over the $1.607 billion credit set forth in the FCC’s rules,” according to a Nextel filing.
Nextel is to pay money into the treasury if the value of the spectrum it returns and relocation expenses do not equal $4.86 billion—the value the FCC put on the G-block. The G-block is the highly contested spectrum in the 1.9 GHz band that Nextel would receive as part of the rebanding plan.
Verizon Wireless Sept. 15 warned Nextel would try to reduce its potential payment and charged that Nextel and the FCC were talking illegally, based on an investor note released Sept. 9 by Legg Mason.
Tim O’Regan, Nextel manager of public affairs, denied that Nextel has talked to the FCC in detail prior to this week about the valuation of the spectrum it would be relinquishing.
“We have been having generalized conversations,” O’Regan told RCR Wireless News, but he admitted that he has not been privy to conversations so he cannot say exactly what was discussed in previous meetings.
Nextel has also asked it be given credit for “the costs it incurs in adding base stations necessary to maintain its existing network capacity during the band reconfiguration transition process.”
Nextel also asked to use a different credit mechanism than envisioned by the FCC in its rules. The FCC wanted Nextel to sign a $2.5 billion irrevocable letter of credit; Nextel previously agreed to an $850 million irrevocable letter of credit. A PowerPoint slide submitted by Nextel earlier this week said, “Letter of Credit Issues: Permit ‘stand by’ rather than ‘debit card’ letter of credit: less costly and more efficient—same protection against risk of default/bankruptcy.”
O’Regan was unable to explain why Nextel’s plan is better but said the important thing was, “If the transition administrator determines that something needs to be paid, they get paid regardless of whether Nextel defaults or goes bankrupt.”
Verizon Wireless declined comment.
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 band Nextel would receive. The FCC released the text of the plan—256 pages—in early August. It has yet to be published in the Federal Register. Nextel has 30 days from publication in the Federal Register to say whether it will agree to the plan.
