Verizon Wants Nextel Spectrum Relocation Blocked

Verizon Wireless(VZ) says it opposes Nextel's (NXTL) emergency-radio-band relocation plan and is calling for regulators to auction the wireless spectrum instead.

The rapid growth of cell-phone services has caused an increase in interference in the nation's public safety radio frequency. To eliminate disruption of 800-megahertz emergency communications, the Federal Communications Commission is considering a proposal from Nextel to vacate the adjacent 700mhz and 900mhz frequency in exchange for a swath of higher bandwidth at 1.9 gigahertz.

Nextel has also offered $850 million to pay for relocation of other interfering operators in the public safety spectrum.

Other than Verizon Wireless, Nextel has had little opposition to the plan. But critics and industry observers say it would be a great windfall for the No. 5 player, giving it a heaping supply of network capacity at a relatively low cost.

Verizon Wireless says the chunk of 1.9ghz spectrum that Nextel wants is worth $7.2 billion and should be auctioned rather than given away.

An FCC representative declined to comment on the Verizon letter and said that there have been several analysts' appraisals of the value of the spectrum that differ with Verizon's figure.

For its part, Nextel says its so-called consensus plan is a fair trade because it would be giving up valuable spectrum in exchange for a replacement spectrum.

And although Verizon Wireless is urging the FCC to put the public radio property up for auction, the company did not promise it would be a bidder for the radio band. Verizon isn't exactly overburdened with cash at this time, with more than $40 billion in debt and facing the potential need to buy out partner Vodafone's (VOD) 45% stake in the joint venture.

Verizon clearly doesn't want to concede any ground to a competitor, and has managed to get 23 members of Congress to sign a letter opposing Nextel's swap proposal.

But recent spectrum auctions have been wholesale disasters as high bidding didn't always lead to full financing. The last auction winner, NextWave, filed for Chapter 11 protection and tied up the spectrum licenses in court for years.

Observers say the FCC wants to clean out the public safety frequency quickly and at no cost to taxpayers. While giving Nextel some prime wireless turf angers rivals, it represents no direct cost to taxpayers and it achieves the goal of a clear emergency radio band.

The FCC rep declined to make any predictions as to when the agency would decide, but said that early this year was a safe bet.

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