Sunday, July 20, 2008

Money Talks: How to Play the Consensus Plan Game

Over the past few months I have heard a common lament from public safety regarding the 800 MHz interference crisis. Officials seem genuinely dismayed -- and even perplexed -- that the debate and eventual solution hinges on money. They don't believe it should. They contend that the lives of first responders and civilians are at risk, so the Federal Communications Commission should fix this now, fiscal consequences be damned.

Their instincts are well directed, of course. No one wants to see misfortune befall a citizen or first responder because a public-safety radio failed due to 800 MHz interference -- not me, not the FCC, not Nextel Communications (whose networks are the root cause of the problem), and not Verizon Wireless (which wants to make sure whatever solution the FCC comes up with doesn't include a competitive advantage for Nextel). Public safety couldn't care less about the commercial implications of potential solutions, nor should it. What's important is keeping first responders and civilians as safe as possible -- it's a black-and-white issue.

Unfortunately, the FCC, Nextel and Verizon Wireless have to consider the many shades of gray that cast a shadow over this debate. Of course this is about money -- unfortunately, it has to be. Nextel CEO Tim Donahue and Verizon Wireless CEO Denny Strigl, as well as the chief executives of every other wireless carrier that could be affected by the outcome, have a fiduciary responsibility to their shareholders to ensure their best interests are served. Donahue acted upon that responsibility this week in a letter to FCC Chairman Michael Powell (see story below).

Donahue was reacting to a recent proposal floated by the Cellular Telecommunications & Internet Association that would replace the 1.9 GHz spectrum sought by Nextel under terms of the so-called Consensus Plan with spectrum at 2.1 GHz. The 2.1 GHz spectrum is considered less valuable than the 1.9 GHz airwaves, and would be "unacceptable," according to Donahue, who vowed that Nextel would "avail itself of every possible legal challenge" to such an outcome. At the same time, CTIA member Verizon Wireless has said it would not litigate should the FCC award the 2.1 GHz spectrum in lieu of the 1.9 GHz airwaves -- otherwise, see you in court. It's safe to assume that Strigl also has shareholder reaction in mind.

While public safety needs to accept the fact that Donahue and Strigl are simply doing their jobs, the sector shouldn't sit in the stands and watch this heavyweight fight -- with the FCC as referee -- play out. On the contrary, it should jump into the ring. If this indeed is really about money, public safety should take the gloves off and start to hit back.

Recently, Bob Gurss, director of government affairs for the Association of Public-Safety Communications Officials International (APCO), told MRT senior writer Donny Jackson that public safety would "hold accountable" any entity that "holds up" an 800 MHz solution. However, Gurss didn't say what public safety might do. As a public service-minded individual, I'd like to make a couple of suggestions.

First, Nextel has been aggressively selling public safety on the merits of its Direct Connect push-to-talk service as an adjunct to their land mobile radio networks. In fact, the sector currently represents about 20% of Nextel's new business, and the carrier expects that percentage to rise over time. Public safety should cancel those contracts, or at least put Nextel on notice that it will move its business to other carriers -- recall that Verizon Wireless and Sprint both are now offering P2T service -- should Nextel fail to compromise. Similarly, public safety should punish Verizon Wireless and any other commercial wireless carrier that wants to move into the mobile data market opportunity that will be created when CDPD networks are shut down in a few months, if they choose to block an 800 MHz solution in court.

Second, there are about 50,000 public-safety agencies nationwide, which employ hundreds of thousands of first responders. It is safe to think that tens of thousands of them use Nextel or Verizon Wireless for their personal mobile phone service. APCO and other major public-safety organizations should start a grassroots effort to punish any carrier that won't compromise by getting first responders to abandon the guilty carrier(s), something that is much easier to do after the advent of wireless local number portability, which took effect last November.

Granted, public safety might be hesitant to attack Nextel, as many officials see the carrier as something of a savior. They give Nextel high marks for being the only entity that -- in their mind -- has presented a viable solution; better still is that Nextel is willing to foot the bill for the rebanding of 800 MHz spectrum, as long as it doesn't cost more than $850 million. In contrast, Verizon Wireless is seen as a grubby interloper.

Also, considering that Nextel and Verizon Wireless both are multibillion-dollar companies, the effect of such strategies would resemble more a jab than a haymaker. But just as a good jab can get a boxer's attention, perhaps public safety can give Donahue and Strigl something to think about.

Here's something else Donahue should consider in the meantime: A few months ago, the families of 12 New York City firefighters filed a $5 billion lawsuit alleging their relatives died because their radios failed to receive evacuation orders before the World Trade Center towers collapsed. Eventually, a judge blocked the suit, but only because the families had applied for awards from the Victim's Compensation Fund; one of the stipulations of receiving compensation from the fund is a waiver of civil litigation. If not for that, it is likely the case would have gone to trial.

Given this, it is a virtual certainty that the survivors of any first responder(s) killed in the line of duty as a direct result of radio failure due to 800 MHz interference would file a multimillion-dollar -- perhaps multibillion-dollar -- lawsuit against Nextel. I wonder what Donahue's shareholders would think about that?

E-mail me at gbischoff@primediabusiness.com.


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