TELECOM Digest OnLine - Sorted: Move to New Airwaves to Cost $936 Million

Move to New Airwaves to Cost $936 Million

Jeremy Pelofsky (
Wed, 28 Dec 2005 10:30:02 -0600

By Jeremy Pelofsky

Moving U.S. Defense Department and 11 other government agencies'
wireless communications to new airwaves will cost almost $936 million,
according to a new government estimate released on Wednesday.

The 90 Megahertz of airwaves the agencies will give up will be sold at
an auction that could be held as early as June 2006. The airwaves are
seen as prime real estate for companies to offer wireless services
like mobile wireless high-speed Internet access.

Michael Gallagher, who heads the Commerce Department's National
Telecommunications and Information Administration which worked on the
cost estimates, said they were less than industry estimates of several
billions of dollars.

"We need to make sure the industry has the resources" for new
services, he said in a telephone interview. The additional airwaves
will help carriers "to be the broadband competitors of tomorrow."

The airwaves could also be used to expand coverage and improve cell
phone service quality.

It could take some agencies up to four years or longer to move 2,240
frequency assignments though most will be completed within three
years, Gallagher said.

There are roughly 201 million wireless subscribers in the United
States and companies like Cingular Wireless and Verizon Wireless are
rolling out new services like high-speed Internet and video accessible
on mobile devices.

The bands to be sold at auction include 1710-1755 Megahertz and
2110-2155 Mhz. The Federal Communications Commission, which conducts
the auction, is currently working on the procedures for the sale.

A law signed last year provides for the proceeds from the auction to
cover the relocation costs for the government agencies. But the FCC
sale can only be completed if the proceeds bring in at least 10
percent more than the costs to relocate the government operations.

The biggest cost is expected to be moving the Defense Department, at
almost $289 million, followed by the Justice Department at
approximately $263 million. Other agencies switching airwaves include
the Energy Department, Federal Aviation Administration and NASA, among

The last major FCC commercial wireless airwaves sale, concluded in
February, raised $2.25 billion.

Cingular Wireless, the No. 1 U.S. carrier, is a joint venture of
BellSouth Corp. and AT&T Inc., Verizon Wireless is the No. 2 provider
and a joint venture of Verizon Communications and Vodafone Group Plc.

Copyright 2005 Reuters Limited.

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