Nextel agrees to swap of radio frequencies

FCC's plan is to reduce interference with police, fire communications

February 08, 2005|By BLOOMBERG NEWS

WASHINGTON - Nextel Communications Inc. agreed to spend $2.8 billion and give up airwaves worth $2.06 billion in exchange for new spectrum under a U.S. government plan to lessen interference of public safety radios.

The airwave swap and other moves such as reprogramming emergency workers' radios will take three years, Robert Foosaner, Nextel's chief regulatory officer, said yesterday at a news conference in Washington.

Nextel, which agreed to be bought by Sprint Corp. in December, had until today to accept the Federal Communications Commission's plan.

After more than two years of deliberating how to eliminate interference between Nextel phones and public-safety radios, the FCC decided in July to award Nextel frequencies valued by the government at $4.86 billion.

Nextel, based in Reston, Va., balked at the initial financial terms, and the government agreed in December to cut the amount the company would have to pay.

"I would never have left if this was undone," said FCC Chairman Michael K. Powell, who announced last month his intent to resign from the top U.S. communications regulator, effective next month. Powell marshaled the other four commissioners into a unanimous decision last year.

Nextel's new frequencies, which may be used to provide high-speed wireless Web access, are closer to channels used by other cell-phone carriers such as Sprint. Nextel won FCC approval in December to trim by $452 million the amount the company would pay for the airwaves.

Under that ruling, Nextel had until today to accept the terms, including the cost of moving users, such as police and fire departments, to frequencies the telecom is vacating. Nextel also will pay the government any difference between those costs and the $4.86 billion, minus a $2.06 billion credit for swapping the older channels.

Chief Executive Officer Timothy M. Donahue handed a letter outlining the company's agreement to Powell at yesterday's news conference.

Nextel could pay more than $2.8 billion if the cost of moving users exceeds that total. The company must obtain a $2.5 billion credit line to finance the moves.

Sprint Nextel, as the merged company is to be known, will assume all of Nextel's obligations under the FCC decision, said Foosaner. The Sprint Nextel merger is to close in the second half of 2005.

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