Sprint Nextel

Sprint Nextel Comments for the Ministry of Economic Development Radio Frequency Auction: 2.3 GHz and 2.5 GHz Bands Discussion Paper

September 14, 2007

Sprint Nextel Corporation (“Sprint Nextel”) welcomes the opportunity to comment on the Ministry of Economic Development’s (“Ministry”) discussion paper, “Radio Frequency Auction: 2.3 GHz and 2.5 GHz Bands.” Please find below an overview of Sprint Nextel’s relevant business operations as well as responses to several of the questions the Ministry poses in this proceeding.

Sprint Nextel Background

By way of background, Sprint Nextel offers a comprehensive range of communications services bringing mobility to consumer, business and government users. Sprint Nextel is widely recognized for developing, engineering and deploying innovative technologies, including two robust wireless networks serving 54 million customers at the end of the second quarter of 2007; industry-leading mobile data services; instant national and international walkie-talkie capabilities; and a global Tier 1 Internet backbone.

In August 2006, Sprint Nextel announced its plans to develop and deploy a nationwide broadband mobile network in the United States using the company's extensive 2500-2690 MHz (referred to herein as 2.5 GHz) spectrum holdings. Sprint Nextel’s wireless broadband network will use the mobile Worldwide Interoperability for Microwave Access (“WiMAX”) IEEE 802.16e-2005 technology standard. Working together with a variety of partners, including Intel, Motorola, Samsung, Nokia, ZTE, ZyXEL, and Google, Sprint Nextel is developing nationwide network infrastructure, as well as mobile WiMAX-enabled chipsets and devices, that will support advanced wireless broadband services for all kinds of portable multimedia, interactive and other consumer uses. In fact, Sprint’s WiMAX ecosystem partners have committed to embed 50 million WiMAX chipsets in devices. These efforts are intended to allow Sprint Nextel customers to experience a nationwide mobile data network that is designed to offer faster transfer speed, lower cost, and greater convenience and enhanced multimedia quality. Sprint will market its WiMAX service under the XohmTM brand, and expects to make it available beginning the first half of 2008.

As a holder of 2.5 GHz spectrum poised to bring innovative technology to market, Sprint Nextel has a keen interest in the deployment of broadband wireless access systems in New Zealand and in other countries, particularly those that may utilize WiMAX technologies.

Question 1: Considerations Relating to Lot Design

Do you agree with the considerations discussed in this chapter concerning lot design? Please provide any comments under the following headings:

a. Expected technical developments and likely demand

As the Ministry observes, there are several advanced technologies available for use in the 2300-2690 MHz (referred to herein as 2.3 GHz) and 2.5 GHz frequency bands, and the expected demand for them in New Zealand is uncertain. Policies permitting technology neutrality and spectrum trading, however, give management right holders
the flexibility to assess and deploy the most appropriate technology under the circumstances and adjust to demand levels accordingly.

• Technology Neutrality: Since technical developments and the likely demand for them are difficult to predict, Sprint Nextel fully supports the New Zealand government’s technology neutrality policy and urges the Ministry to extend that policy to the 2.3 GHz and 2.5 GHz bands. Full technology neutrality allows market forces, rather than the government, to determine the optimal use of spectrum. The United States adopted a technology neutral approach for the 2.5 GHz band, and while Sprint Nextel has chosen to implement WiMAX in our spectrum holdings in this band – as have many other operators around the world – Sprint Nextel believes that the market is better positioned to assess the appropriate technology and services based on cost, efficiency, demand and a host of other factors. In addition, technology is not static, but continuously evolving. Not locking management right holders into a particular technology or set of technologies allows them to adopt cheaper, more advanced systems and applications as they become available, without unnecessary delay.

Technology neutrality also serves as a catalyst for competition and investment in new technology. Removing the regulatory advantage one technology has over another, levels the playing field for new entrants. Moreover, if the technology for a particular band has not been pre-determined, innovators are more apt to develop more advanced and cost-efficient technologies, because they know more operators will have the flexibility to adopt their technology.

• Spectrum Trading: Spectrum trading is another tool that can serve as a catalyst for technological development, while giving providers the flexibility to address fluctuations in demand. Access to sufficient spectrum is an essential input to wireless communications service deployment. Under traditional spectrum management approaches, the only way an operator could obtain spectrum would be by purchasing it directly from the government (through auctions, beauty contests, lotteries, etc.) or by purchasing the spectrum holder. Spectrum trading, however, which permits spectrum holders to buy or sell the right to use certain frequencies, gives operators faster and easier access to this limited resource.

Spectrum trading optimizes spectrum use because it assigns spectrum resources to their highest use. It gives a management right holder with excess spectrum a financial incentive to sell or lease its unused or underutilized spectrum to the operator that values it the most and will fully utilize it. Accelerated access to spectrum shortens the time it takes for operators to bring new services and technologies to market.

Moreover, spectrum trading allows for fluctuations in spectrum needs over time. Operators can aggregate additional spectrum where they need it most and obtain sufficient amounts of spectrum to offer new services requiring greater bandwidth. Spectrum trading also affords operators the opportunity to acquire spectrum to satisfy short-term capacity needs quickly.

c. Acquisition limits

The Ministry proposes to cap the amount of spectrum an unassociated bidder may obtain at 35 MHz to help new operators enter the market and thus promote competition. Such spectrum acquisition limits, however, may actually constrain technological advancement and limit the ability for each operator to compete. For example, it is possible that 35 MHz of spectrum may be insufficient to support the capacity and throughput that next generation technologies and services will likely require. In addition, operators may need spectrum to accommodate increasing demand for advanced services or to justify the necessary investment in infrastructure. Therefore, rather than subjecting operators to a rigid spectrum acquisition limit that may inhibit innovation, the Ministry should give them flexibility to obtain the spectrum necessary to support the evolution and expansion of broadband services.

d. Technical issues such as:

• Accommodating TDD and FDD technologies
• Guard bands
• Other

Sprint Nextel supports the Ministry’s proposal to let management right holders take responsibility for addressing interference issues and allow them to acquire sufficient
spectrum to do so. This approach gives management right holders the maximum flexibility to choose the appropriate interference mitigation techniques (e.g., height benchmarking, angular discrimination), which best suit their particular circumstances. The Ministry-owned guard band approach only gives holders a one-size-fits-all solution, whereas putting the decision in the hands of spectrum holders gives them a wider range of options from which to tailor the optimum solution. In addition, as technology advances and becomes more spectrally efficient, guard band widths may narrow thus rendering the Ministry’s fixed guard bands spectrally inefficient. The Ministry, however, still has a significant role to play in interference matters. If operators cannot cooperate and address interference issues on their own by mutual agreement, there should be a mechanism in place that allows them to obtain the Ministry’s assistance in resolving disputes expeditiously. Moreover, the Ministry should still use its authority to preclude spectrum speculation and anti-competitive conduct.

Question 2: Proposed Lot Design

Do you prefer Option A, B or C for the lot design? Please explain why. If you prefer Option C, is your preference C(i) or C(ii)? Why? If there is an alternative option you prefer, please specify it and explain why it would be preferable.

Option A, which provides the largest spectrum allocation blocks and thus offers the greatest degree of flexibility, is preferable as long as the Ministry permits operator-to-operator trading of spectrum in increments smaller than 35 MHz after the initial licenses are granted. Specifically, within a reasonable period after the initial license grant date, licensees should be permitted to partition, disaggregate or aggregate spectrum freely as their spectrum and business needs dictate. Giving licensees maximum flexibility under Option A allows them to arrive at spectrum packages that best address their business models and selected technologies.