Subject: [NEXTEL-1] CTIA On 2.1 Ghz-

From: [email-masked]
Date: Mon, 10 May 2004 14:51:35 -0400

May 7, 2004
Ms. Marlene H. Dortch

Secretary Federal Communications Commission
445 12th Street, SW
12th Street Lobby, TW-A325
Washington, D.C. 20554

Re: Ex Parte Presentation

WT Docket 02-55
Dear Ms. Dortch:

On April 29, 2004, CTIA filed a letter with the Commission in which it
proposed a framework to resolve the above captioned proceeding,
including the potential realignment of the 800 MHz band.1 This proposal
includes a grant of spectrum in the 2.1 GHz band to Nextel and a
requirement for Nextel to deposit a minimum of $3 billion into a trust
fund for Public Safety and Critical Infrastructure licensees that would
be affected by the band realignment.2 The CTIA proposal, as compared to
the Consensus Plan, would offer substantial benefits to Public Safety
licensees through much higher funding and a far more certain relocation
process. Nextel would also benefit because it would receive 10 MHz of
contiguous 2.1 GHz spectrum – the same spectrum it proposed to receive
under its original proposal.3 Nextel would only receive this spectrum,
however, after it has completed rebanding, thereby ensuring that Public
Safety’s needs are met.
1 See Letter from Steve Largent, President & CEO of CTIA, to Chairman
Powell and other Commissioners, WT Docket No. 02-55, April 29, 2004
(“CTIA Proposal”).
2 These licensees would include those entities that are currently
included within the scope of the “Consensus Plan” proposal, which covers
not only Public Safety and Critical Infrastructure licensees, but also
Business and Industrial/Land Transportation (“B/ILT”) licensees.
1400 16th Street, NW Suite 600 Washington, DC 20036 202.785.0081 phone
202.785.0721 fax www.ctiashow.com
3 See “Promoting Public Safety Communications: Realigning the 800 MHz
Land Mobile Radio Band to Rectify Commercial Mobile Radio – Public
Safety Interference and Allocate Additional Spectrum to Meet Critical
Public Safety Needs,” White Paper filed by Nextel Communications,
November 21, 2001, in which Nextel proposed that it receive
2020-2025/2170-2175 MHz (referred to here as the “2.1 GHz” band) as
compensation for its contributions under the proposed approach.
2
Despite its initial representation to the Commission that the 2.1 GHz
band was suitable replacement spectrum, Nextel now objects to the use of
that band.4 It argues “there are numerous technical and operational
obstacles that raise doubts about the use of this spectrum for CMRS
operations,” including higher cost for clearing incumbents, less
favorable propagation characteristics, and higher cost for developing
network and customer equipment.
CTIA believes that the 1.9 GHz and 2.1 GHz bands are both well suited to
support commercial mobile services, and would provide the contiguous
spectrum necessary to support advanced wireless technologies. As
discussed in the following sections, CTIA believes that the
characteristics of the 2.1 GHz band are in fact comparable to the 1.9
GHz band, and the differences are of far less consequence than Nextel
suggested in its April 22, 2004 ex parte.
Most importantly, it’s essential to remember that the focus of this
entire proceeding is to remedy Public Safety interference. The choice of
1.9 vs. 2.1 GHz does not affect the process of relocating Public Safety
at all. However, when combined with the overall proposal that CTIA
submitted on April 29th, which provides a $3 billion trust fund for
Public Safety, Public Safety’s needs are clearly more effectively met
through the package CTIA has proposed that includes 2.1 GHz.
A. BAND CLEARING COSTS
Both the 1.9 GHz and 2.1 GHz bands are currently encumbered by the
operations of the Broadcast Auxiliary Service (“BAS”). These operations
would affect the base transmit segment of 1.9 GHz (i.e., 1990-1995 MHz)
and the mobile transmit segment of 2.1 GHz (i.e., 2020-2025 MHz). While
we do not have detailed information regarding the current use of
spectrum allocated to BAS, we believe it is reasonable to assume that
the costs of clearing BAS from 5 MHz of 2.1 GHz spectrum would be
comparable to the costs of clearing 5 MHz of 1.9 GHz spectrum. Nextel
agrees with this assessment.5
The base transmit segment of 2.1 GHz (i.e., 2170-2175 MHz) is currently
occupied by fixed microwave licensees, whereas the mobile transmit
segment of 1.9 GHz (i.e., 1910-1915 MHz) is used by unlicensed PCS
devices. Nextel has estimated that the cost of clearing the 2170-2175
MHz band would be approximately $150 million, while the cost of clearing
the 1910-1915 MHz band would be approximately $15 million.6 Even
assuming these figures are accurate, given that the cost of relocating
fixed microwave systems would be incurred over several years, the net
present value of the difference would be less than $100 million. While
we cannot substantiate Nextel’s
4 See Letter from Nextel to Marlene H. Dortch, Secretary of the Federal
Communications Commission, (“Nextel Letter”), WT Docket No. 02-55, April
22, 2004.
5 Id at 7. 2 1400 16th Street, NW Suite 600 Washington, DC 20036
202.785.0081 phone 202.785.0721 fax www.wow-com.com
6 Id. CTIA notes that the 2.1 GHz fixed microwave band has not had a
primary license granted since 1996. Furthermore, some fixed microwave
licensees are likely to have dismantled their facilities or moved to
other spectrum in light of the Commission’s reallocation decision.
Consequently, Nextel’s estimates for this band are likely to be high.
3
estimates, we do not believe this difference is significant relative to
the multi-billion dollar value of the 2.1 GHz spectrum.
It would also be feasible to substitute other spectrum in the 2155-2180
MHz band for the 2170-2175 MHz band originally requested by Nextel. One
suitable substitute would be the 2175-2180 MHz band. This band is also
used by fixed microwave licensees but has fewer incumbent systems in
operation,7 which means that use of this band would result in lower
relocation costs. Another option would be the 2155-2160 MHz band, which
is currently licensed to the Multipoint Distribution Service (“MDS”).
This band is deployed with fewer systems than the 2170-2175 MHz band
currently used for fixed microwave systems, and would require fewer
relocations. This would further reduce any differences in band clearing
costs between 1.9 GHz and 2.1 GHz, and presumably satisfy Nextel’s
desire to have spectrum adjacent to the 2110-2155 MHz spectrum that is
to be licensed for Advanced Wireless Services (“AWS”).
Nextel claims that its original 2.1 GHz proposal was premised on the
assumption that the 2170-2175 MHz band would be adjacent to spectrum
expected to be used for AWS – i.e., 2110-2170 MHz, and thus, would yield
to Nextel significant economies of scale. 8 At the time Nextel filed its
initial White Paper, however, it was far from clear that spectrum
adjacent to 2170 MHz would be made available for AWS. Moreover, it is
not necessary to have adjacent spectrum to ensure that there are
economies of scale in the use of 2.1 GHz spectrum. Spectrum in the 2.1
GHz band has been identified worldwide for advanced wireless services,
and we expect such harmonization to produce significant scale economies.
There may be additional efficiencies that would result from one operator
having the 2170-2175 MHz band and spectrum adjacent to it, but Nextel
would have had no guarantee that it would have been the winner of that
block of AWS spectrum in any event. Even if Nextel’s claim about
adjacent spectrum were valid, however, that is still no basis to reject
a 2.1 GHz solution, since the 2155-2160 MHz band is available and
adjacent to AWS.
PROPAGATION CHARACTERISTICS
Higher frequency bands generally have a more limited range due to
greater propagation losses at higher frequencies. However, the 1.9 GHz
and 2.1 GHz bands are relatively close in spectrum. Consequently, they
would have similar propagation characteristics, and a wireless operator
should not suffer cost penalties due to operation in the 2.1 GHz band.
In the reverse link (mobile to base), the 1.9 GHz and 2.1 GHz bands are
separated by only 110 MHz. Based purely on free space loss, at a given
distance, the differential reverse link path loss between the 1.9 GHz
and 2.1 GHz bands is only 0.48 dB. Using
7 According to the FCC’s database, there are approximately 700 fixed
microwave links currently licensed in that band, which is significantly
less than the number of links licensed at 2170-2175 MHz. In its April 22
letter, Nextel indicated that there are approximately 900 fixed
microwave links in the 2170-2175 MHz band. Nextel Letter at 7.
3 1400 16th Street, NW Suite 600 Washington, DC 20036 202.785.0081 phone
202.785.0721 fax www.wow-com.com
8 Nextel Letter at footnote 12.
4
the well-accepted COST 231 Hata model,9 the difference is very small,
approximately 0.6 dB (0.5 dB) in a suburban (rural) area. In the forward
link (base to mobile), the 1.9 GHz and 2.1 GHz bands are separated by
180 MHz. This difference in frequency results in a differential forward
link path loss of approximately 1.1 dB (0.8 dB) for a suburban (rural)
area.
These estimates do not take into account the likelihood for larger
antenna gains at 2.1 GHz and/or the use of base station amplifiers
delivering a greater output power. When deploying mobile systems
operating in the 800 MHz (cellular) and 1.9 GHz (PCS) bands, wireless
operators typically employ antenna apertures that are maintained at a
constant value over both frequency bands. Thus, PCS frequencies
typically have antenna gains that are 3 dB higher than cellular
frequencies, partially offsetting the radio propagation differences
between the two bands. In the same manner, 2.1 GHz band operators would
likely use antennas with the same aperture as PCS antennas, and
therefore would experience a slightly higher antenna gain that would
offset the differential path loss between the 1.9 GHz and 2.1 GHz bands.

In interference- or capacity-limited situations, such as in urban areas,
slight differences in radio propagation are not an issue. For these
types of systems, the number of cells required to provide service is
determined by the traffic density and distribution of traffic, not by
path loss. To provide increased system capacity, a larger number of cell
sites are used that are designed to operate at lower power levels and
cover smaller areas. In fact, capacity-limited systems actually perform
slightly better at higher frequencies because interference from adjacent
cells is reduced.
In coverage-limited situations, such as in rural areas, propagation
differences may need to be considered. For these types of systems, the
reverse link is typically the limiting factor. As has already been
noted, the use of 2.1 GHz versus 1.9 GHz would result in a differential
path loss of approximately 0.5 dB in a rural environment. This
translates into a small loss of cell range of approximately 3% and a
loss in cell area of 6%. However, as previously noted, system designers
typically compensate for these slight differences in path loss by
employing a variety of standard engineering practices, including the use
of different antennas or higher power amplifiers.

EQUIPMENT COSTS
The 1.9 GHz and 2.1 GHz bands are both in portions of the radio spectrum
that are ideally suited for mobile services, and both would provide the
contiguous spectrum that is necessary to support advanced wireless
technologies (e.g., CDMA) and broadband wireless services. The PCS
spectrum adjacent to the 1.9 GHz band is already being used for advanced
wireless technologies, and equipment is already widely deployed in this
band. While the 2.1 GHz band is not currently being deployed in the
U.S., spectrum in this band is being deployed with advanced wireless
technologies (e.g., UMTS) in Europe and other parts of the world,
consistent with the International Telecommunications Union’s
identification of spectrum for advanced wireless services (denoted
IMT-2000).

COST 231 Hata is a model for predicting radio frequency propagation.

5

This worldwide identification of spectrum for IMT-2000 is what prompted
the FCC to allocate the 2110-2155 MHz band to AWS, noting that it would
provide some harmonization with similar spectrum allocations around the
world. The 2.1 GHz band would be similarly harmonized with use of the
band worldwide, and thus, would ultimately benefit from the same
economies of scale.

At present, neither network nor customer equipment is currently
available in either the 1.9 GHz “G” block (1910-1915/1990-1995 MHz) or
2.1 GHz (2020-2025/2170-2175 MHz) bands. However, we anticipate that
manufacturers will quickly gear up to provide such equipment if either,
or both, of these bands is made available for commercial use. This will
be particularly true if licenses are made available on a nationwide
basis. Initially, the bill of materials costs for 2.1 GHz equipment may
be slightly higher than in the 1.9 GHz “G” block because equipment
already has been deployed in the 1.9 GHz bands adjacent to the “G”
block. Over the longer term, however, we do not expect there to be any
significant differences in the costs of 1.9 GHz and 2.1 GHz equipment.10

VALUATION OF 2.1 GHz

Contrary to Nextel’s very recent claims, the above technical and other
information on band clearing costs, propagation characteristics and
equipment costs makes clear that the 2.1 GHz and 1.9 GHz blocks are
comparable for purposes of CMRS operations, lending further support for
CTIA’s April 29th proposal. CTIA acknowledges that individual companies
may assess the relative value of 1.9 GHz and 2.1 GHz spectrum somewhat
differently. For example, wireless carriers that currently operate in
the PCS band would be more likely to place a higher value on obtaining
10 MHz in the 1.9 GHz band than 10 MHz in the 2.1 GHz band.

The record establishes a value of the 1.9 GHz band at between $4.6 and
$5.3 billion. Kane Reece Associates, which is the only professional
appraisal firm that has submitted an appraisal to the FCC that is
consistent with industry practice, appraised that spectrum at $5.28
billion.11 Three investment firms (including one with a substantial
equity stake in Nextel) put the fair market value of the 1.9 GHz
spectrum at $4.6, $4.8 and $5.2 billion, respectively.12 Verizon
Wireless has asked the FCC to auction the 1.9

10 To illustrate this point, it is instructive to look at the costs of
cellular and PCS equipment. While cellular and PCS operate in
substantially different frequency bands, the costs of network and
customer equipment are virtually identical.
11 See Ex Parte Letter from Verizon Wireless, which includes
“Determination of the Fair Market Value of the Certain Portions of FCC
Licensed Wireless Spectrum Proposed for Realignment by Nextel
Communications, Inc. Under FCC Docket No. 02-55 as of December 31,
2002,” Appraisal by Kane Reece Associates, WT Docket No. 02-55, Oct. 27,
2003.
5 1400 16th Street, NW Suite 600 Washington, DC 20036 202.785.0081 phone
202.785.0721 fax www.wow-com.com
12 See "Logjam Breaks on FCC Consideration of Nextel Spectrum Swap,"
Report of Legg Mason, March 10, 2004; see also "Nextel Communications,
Inc., Moving Toward a Conclusion?" Report of Merrill Lynch, March 10,
2004; see also "Wireless: NXTL (U/C) & FCC Moving Towards Negotiated
Agreement on Spectrum Issues," report of Goldman Sachs, October 5, 2003.

6
GHz band and stated that it would open the bidding in an immediate
auction for a nationwide 1.9 GHz license at $5.0 billion.
Information that is already in the record supports a valuation of the
2.1 GHz spectrum in the range of $4.5 billion. A valuation can be
derived from Nextel’s original proposal. Nextel proposed to contribute 4
MHz at 700 MHz, 2.5 MHz at 800 MHz, and 4 MHz at 900 MHz in exchange for
10 MHz of spectrum at 2.1 GHz. One can presume that Nextel believed the
2.1 GHz spectrum to have a value that at least equals the value of the
700, 800, and 900 MHz spectrum that it would contribute plus any costs
that Nextel would incur to facilitate realignment. 13 Using the spectrum
blocks that Nextel proposed to contribute in both its 2001 White Paper
and in its subsequent “Consensus Plan” proposal, and applying the values
that Nextel ascribed to these spectrum blocks in its March 5, 2004 ex
parte letter, Nextel’s total contributions for receiving the 2.1 GHz
spectrum is as follows:

700 MHz spectrum = $ 350 million
800 MHz spectrum = $1,440 million
900 MHz spectrum = $1,640 million
Costs to relocate Public Safety = $ 500 million14
Nextel’s relocation costs = $ 550 million
Total “Contributions” = $4,480 million

From the information that Nextel itself has filed, the FCC can conclude
that Nextel believed the 2.1 GHz spectrum to be worth at least $4.48
billion. Otherwise, Nextel would have been advocating a proposal that
would cost its own shareholders value – something we doubt any company
would propose.

Given Nextel’s own estimations, the additional record evidence presented
in this proceeding, and the technical and operational comparability of
2.1 GHz spectrum relative to 1.9 GHz, CTIA believes it is reasonable for
the Commission to consider the fair market value of the 2.1 GHz spectrum
to be in the range of $4.5 billion. This is entirely consistent with the
CTIA April 29th proposal, in which Nextel contributes at least $3
billion to a Public Safety Trust Fund and the 2.5 MHz at 800 MHz it
proposes in the “Consensus Plan,” and receives spectrum at 2.1 GHz in
exchange.

13 Indeed, in its November 21, 2001 press release announcing its White
Paper proposal, Nextel indicated that under the proposal, “Nextel would
maintain its net spectrum allocation, and does not anticipate any
adverse impact on its ability to serve its existing or future
customers.”

14 Subsequent to its original proposal, Nextel raised the amount it was
prepared to contribute to the rebanding effort from $500 million to $850
million. Nextel’s 1.9 GHz proposal included commitments to make
available up to an additional $200 million for public safety relocation
and a separate $150 million fund to pay the relocation costs of other
800 MHz incumbents. Since none of the other elements of its own “value
for value” proposal changed, this suggests that it places the value of
the 1.9 GHz today at least $350 million above the value of the 2.1 GHz
spectrum, i.e., $4.93 billion – very close to the Kane Reece value for
the 1.9 GHz band, $5.28 billion.
7

E. NOTICE
As CTIA noted in its April 29th ex parte, any suggestion that there is
an inadequate record to support a decision to use the 2.1 GHz band in
this proceeding is refuted by Nextel’s own submissions.15 Moreover, the
general characteristics of the 2020-2025 MHz and 2150-2200 MHz bands
have been extensively examined in two related proceedings at the
Commission, the proceeding examining spectrum for AWS, and the
proceeding considering the appropriate use for Mobile Satellite Service
(“MSS”) spectrum that has been reallocated from MSS to other uses.

16

The record in this proceeding, not to mention the AWS and MSS
proceedings, is certainly sufficient to ensure that the legal
requirements of the Administrative Procedure Act (“APA”) have been fully
met if the agency elects to use 2.1 GHz spectrum for Nextel. The APA
requires that the Commission give advance notice of a proposed
rulemaking by publishing in the Federal Register a notice containing
“either the terms or substance of the proposed rule or a description of
the subjects and issues involved.” In this case, the Commission
specifically raised in the Notice of Proposed Rulemaking initiating this
proceeding the proposal to use spectrum in the 2.1 GHz band as
replacement spectrum for Nextel. The Commission has also complied with
the APA requirement that it “give interested persons an opportunity to
participate in the rule making through submission of written data,
views, or arguments with or without opportunity for oral presentation.”
Nextel submitted responsive comments supporting the use of spectrum at
2.1 GHz as replacement spectrum and other parties offered their views.
Nothing more is required under the APA.

15 See CTIA Proposal at p. 4-5.
16 See, e.g., Amendment of Part 2 of the Commission’s Rules to Allocate
Spectrum Below 3 GHz for Mobile and Fixed Services to Support the
Introduction of New Advanced Services, including Third Generation
Wireless Systems, ET Docket No 00-258, Amendment of Section 2.106 of the
Commission’s Rules to Allocate Spectrum at 2 GHz for Use by the
Mobile-Satellite Service, ET Docket No; 95-18, Establishment of Policies
and Service Rules for the Mobile-Satellite Service in the 2 GHz band, IB
Docket No. 99-81, Memorandum Opinion and Order and Further Notice of
Proposed Rulemaking, 15 FCC Rcd 16043 (2001); Amendment of Part 2 of the
Commission's Rules to Allocate Spectrum Below 3 GHz for Mobile and Fixed
Services to Support the Introduction of New Advanced Wireless Services,
including Third Generation Wireless Systems, ET Docket No. 00-258, The
Establishment of Policies and Service Rules for the Mobile-Satellite
Service in the 2 GHz Band, IB Docket No. 99-81, Third Report and Order,
Third Notice of Proposed Rulemaking and Second Memorandum Opinion and
Order, FCC 03-16 (rel. Feb. 10, 2003). 7 1400 16th Street, NW Suite 600
Washington, DC 20036 202.785.0081

In conclusion, the record in this proceeding, as well as in the AWS

and MSS Reallocation proceedings, indicates that the 2.1 GHz band is
suitable replacement spectrum for what Nextel would give up (in spectrum
and in contributions toward the rebanding process) to facilitate
realignment of the 800 MHz band. The 1.9 GHz and 2.1 GHz bands are
technically and operationally comparable and both bands will support
commercial mobile services, including advanced wireless services that
require contiguous spectrum. CTIA submits that providing Nextel with the
spectrum it originally requested in the 2.1 GHz band, along with the
other proposals contained in its April 29th ex parte, would be the most
equitable solution to the challenges posed in this proceeding that would
provide Public Safety with certain and adequate funding to pay for
relocation.
Respectfully Submitted,
Diane Cornell
Diane J. Cornell

Vice President, Regulatory Policy
cc: Chairman Michael Powell
 Commissioner Kathleen Abernathy
 Commissioner Michael Copps
 Commissioner Kevin Martin
 Commissioner Jonathan Adelstein

Bryan Tramont
Sheryl Wilkerson
Jennifer Manner
Paul Margie
Sam Feder
Barry Ohlson
John Muleta
John Rogovin
Ed Thomas

 http://svartifoss2.fcc.gov/prod/ecfs/retrieve.cgi?native_or_pdf=pdf&id_document=6516183828

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