Verizon Moves To Head Off Nextel In Spectrum Swap

There’s a lingering problem in the 800MHz bands where Nextel operates: Nextel’s tower’s transmissions interfere with emergency (police, fire, safety) services that uses adjacent frequencies. Nextel offered long ago to trade the spectrum they use at 800 for some other spectrum, say at 1900MHz. Last November, I wrote about why they would be motivated to ‘help’ the FCC by doing this spectrum swap. Unsurprisingly, the other wireless carriers want to stop Nextel’s swap (even if only to jerk with a competitor). But recently, Verizon Wireless put their money where their jerk is, and offered to pay $5 billion for the spectrum in question. Measured in dollars, this is far more than Nextel is offering to pay. But this is, as I said in November, a “two-step”; it’s a dance for political favor and public opinion, and it appears Verizon just entered the dance. However, the truth, as usual, lies between what the two sides are saying. Yes, the spectrum swap as proposed is a boon to Nextel, but in this case there is also significant public benefit from their vacating the 800MHz slot. This benefit cannot be measured in dollars, and therefore a pure cash auction is not an appropriate method of determining the value of the 1900 spectrum in contention. Let’s put it this way, if it were an auction, Nextel just bid ‘improving public safety communications in the 800MHZ band, and possibly saving your life’, and dance all they want, that’s a bid no other carrier can match.

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