Verizon Offers $5 Billion for Spectrum if Auction were Held

(Washington, D.C.) –  The Council for Citizens Against Government Waste (CCAGW) today asked the Federal Communications Commission (FCC) to scrap its plan to swap airwave spectrum with Nextel Communications at a below-market price of $850 million.  The private deal aims at reducing Nextel’s interference with 800-megahertz emergency airwaves by offering it more efficient 1.9 gigahertz spectrum used by other wireless providers.  Verizon Wireless said yesterday it would offer $5 billion if an auction were held for the unused nationwide spectrum.

“Verizon’s $5 billion bid shows just how much money the government is passing up,” CCAGW President Tom Schatz said.  “This is a sweetheart deal that puts rival carriers at a competitive disadvantage.”

The 1.9 GHz band would give Nextel the ability to offer services not available in the current range.  The value of this contiguous spectrum has been estimated to be worth as much as $7 billion if sold at auction.  While the law requires new spectrum be made to make new spectrum available to all companies, some at the FCC claim the authority to assign spectrum if it is in the public interest.

“It is ironic that this plan could give Nextel nearly a $5 billion windfall to ‘correct’ an interference problem it caused in the first place,” Schatz continued.  “While the plan purports to solve a public safety issue, it really is an attempt to obtain large portions of valuable spectrum at no cost.”

While Nextel proposes to pay $850 million to help relocate public safety bands elsewhere, the carrier admits in its FCC filing that its plan would still not end the interference.  In addition, that amount is less than half of the estimated $1.5 – $2.5 billion that may be needed to remedy the interference problems.

“The use of competitive bidding for electromagnetic spectrum has returned some $14.4 billion for the taxpayers since 1994,” Schatz concluded.  “We urge the FCC to adopt one of several other proposals to address the public safety issue without ripping off taxpayers.  Considering the $521 billion deficit, the government cannot afford to simply give away a valuable asset such as spectrum.”

The Council for Citizens Against Government Waste is the lobbying arm of Citizens Against Government Waste, the nation's largest nonpartisan, nonprofit organization dedicated to eliminating waste, fraud, abuse, and mismanagement in government.