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July 8, 2004

FCC Gives Nextel Spectrum Shuffle Approval, But Does Nextel Approve?

By Glenn Fleishman

Reuters reports that the FCC commissioners voted 5-0 in favor of what sounded like a Nextel plan to reorganize an ugly band: Nextel owns tiny slices of a very ugly chopped up range in the 700 and 800 MHz, and their proposal was to reorganize it so that the public-safety purposes to which other slices are put can be consolidated and provided with more reliability.

For their part, Nextel would receive a contiguous range in the 1.9 GHz band, and be less likely to cause interference in public-safety bands—which many blame not on Nextel but on the equipment used for fire, police, and emergencies—and have an easier time in providing cellular coverage at those higher frequencies.

The FCC values the deal at $4.8 billion, but will give Nextel credit for $1.6 billion in returning the lower-band frequencies. Nextel has to put up a line of credit for $2.5 billion to cover relocation costs, which are allowed to exceed that amount. If Nextel’s final bill is less than $3.2 billion, they have to pay the government the difference.

Nextel’s response was muted; they had wanted to pay $1.36 billion. Other cellular operators were complaining that the deal gave Nextel too much; it looks like the FCC chose this approach to make it worthwhile to public safety without letting Nextel off the hook.

Posted by Glennf at July 8, 2004 3:11 PM

Categories: Financial, Politics, Spectrum

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