(Washington, D.C.) – The Council for Citizens Against Government Waste (CCAGW) today celebrated a victory for taxpayers as the Federal Communications Commission (FCC) yanked its approval of a plan to swap airwave spectrum with Nextel Communications at a below-market price.  The “Consensus Plan,” designed to reduce Nextel’s interference with police and emergency airwaves, had Nextel giving up its 800-megahertz spectrum and paying $850 million to move public safety agencies to less-crowded frequencies.  In return, Nextel would have gotten the rights to airwaves in the more efficient and more valuable 1.9 gigahertz range.  CCAGW criticized the plan for violating FCC policy and federal law, which require new spectrum to be auctioned off to the highest bidder. 

“This was a sweetheart deal for Nextel that would have put rival carriers at a competitive disadvantage.” CCAGW President Tom Schatz said.  “Thankfully for consumers and taxpayers, the FCC appears to be reversing its intention to give away billions of dollars worth of spectrum.  The airwaves are a public resource, and that money rightfully belongs to the taxpayers.”

Verizon Wireless stated that it would start the bidding at $5 billion if an auction for the 1.9 gigahertz spectrum were held.  The Nextel-friendly plan was informally approved in early April by a majority of the five commissioners, including Chairman Michael K. Powell.  But discussion continued against a backdrop of controversy over just how much money the government was passing up, thanks in part to the lobbying efforts of CCAGW.  This week, Powell pulled his vote supporting the 1.9 gigahertz exchange, in a move that most likely signals a majority of commissioners favor giving Nextel the less valuable 2.1 gigahertz spectrum instead.

“It is ironic that the Consensus Plan would give Nextel a multi-billion dollar 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.”

The value of the 1.9 GHz contiguous spectrum has been estimated to be worth as much as $7 billion if sold at auction.  However, Nextel’s plan would require the company to pay only $850 million and reband the 800 MHz spectrum.  The use of competitive bidding for electromagnetic spectrum has returned some $14.4 billion to the taxpayers since 1994.

“The FCC should adopt a different proposal that addresses the public safety issue without ripping off taxpayers,” Schatz concluded.  “Considering the projected $521 billion budget 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.