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FCC closes in on 800 MHz decision Page 1 of 2 M3F~A4 (kkn:. .lit-.iPP..-CF ~GM~GFCURI3Y~IpitFif ~:f Ytt R,eM6,YWt~Mtt NC6iY PAOIU TKllYY.UG FCC closes in on 800 MHz decision By Glenn Bischoff Mobile Radio Technology, Apr 1, 2004 Federal Communications Commission staff last month recommended adoption of the Consensus Plan to mitigate the interference that plagues the 800 MHz band and disrupts first-responder communications in many sections of the country, according to sources. But there is a significant twist. The FCC staff also recommended the rejection of Nextel's offer to pay $850 million to cover the costs of the rebanding and instead called for the commission to negotiate the carrier's final financial contribution, with no cap, sources said. Critics maintain that the final cost of the rebanding will far exceed Nextel's projections. "The Consensus Plan suggests that only 1 % of handsets will have to be replaced as a result of the rebanding," said Jill Lyon, general counsel for the United Telecom Council. "But Motorola estimates that 30% of handsets will have to be replaced and that it will cost $77 million for each 1 % of handsets that are replaced. That would put the cost at $2.1 billion, just for the handsets." While generally supporting 800 MHz spectrum rebanding, Rep. Vito Fossella (R-N.Y.) last month also expressed concern about a potential budget shortfall should the Consensus Plan be adopted. "The Consensus Plan fails to provide sufficient funding to upgrade public-safety communications, with some estimating a shortfall of $1 billion," Fossella said in a statement. "Indeed, because no provisions have been made for additional funding to cover public safety's costs, the taxpayers will likely be forced to foot the bill." In addition to negotiating a larger contribution from Nextel, the FCC staff called for the carrier to pay for the 10 MHz of spectrum it would receive in the 1.9 GHz band as part of the deal. At least one carrier - Verizon Wireless -has said it would be eager to participate in an auction for that spectrum, which would drive up the value of the airwaves. As a result, Nextel stands to pay a lot more than it had hoped to clean up the 800 MHz mess should the FCC commissioners adopt the staff recommendation. Patrick Comack, telecom analyst for Guzman & Co., predicted Nextel would pay an additional $1.5 billion on top of the $850 million it already has pledged, bringing its total payment to about $2.4 billion. But awarding Nextel the 1.9 GHz spectrum rather than auctioning the airwaves -even if the carrier pays a fair market price -could create a new headache for the FCC, according to Scott Cleland,CEO of The Precursor Group. "[The FCC has] got to thread the needle here, because that decision will be challenged in court," Cleland said. "They don't want rebanding to be caught up [in litigation]." Meanwhile, proponents of the Balanced Approach Plan continued their fight. First, they reiterated their ATT. H http://iwce-mrt.com/microsites/magazinearticle.asp?mode=print&magazinearticleid=196627... 6/24/04