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Nextel Wants Better FCC Deal

Company Seeks More Credit for Its Airwaves

By Yuki Noguchi
Washington Post Staff Writer
Tuesday, September 21, 2004; Page E01

Nextel Communications Inc. is pressing the Federal Communications Commission to revamp its controversial decision giving the cellular company new airwaves, seeking changes that according to some estimates could save Nextel as much as $700 million.

In July, the FCC tried to untangle interference between the Reston company's cellular towers and police and fire radio systems around the country.

Nextel, in meetings with the FCC, has asked for more credit for airwaves it will give up for public safety use. (Jay Mallin -- Bloomberg News)

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The regulators agreed to give Nextel new airwaves that the FCC values at $3.25 billion. In return, the company would have to provide a package of equal value by turning in its old airwaves, underwriting the costs to move fire and police communications and paying any remaining difference in cash.

Although the FCC decision was widely viewed as a major victory for Nextel -- and denounced as a "giveaway" by rival Verizon Wireless -- the company's board of directors has yet to accept the deal.

In a series of meetings with FCC staffers in recent weeks, Nextel executives have asked to be given more credit for the airwaves that the company would give back. That, in turn, would require Nextel to pay less in cash.

The recalculation, according to a source close to the commission who spoke only on condition of anonymity because the proceeding is still pending, would reduce Nextel's cash payment by between $500 million and $700 million.

Investment firm Legg Mason Wood Walker Inc., which has been monitoring Nextel's talks with the FCC, also said in a report to investors that the change could reduce Nextel's cash payment by as much as $700 million, if the other costs remain as Nextel estimated.

Lauren Patrich, a spokeswoman for the FCC's wireless bureau, declined to comment.

Nextel spokeswoman Leigh Horner said Nextel's goal is to resolve the problems as quickly as possible.

"There are two fundamental things we have to make sure we can do, which is to make sure that we can operate our network for our 14 million customers, and the second is that we can achieve the realignment in the time frame that the FCC has established," Horner said.

Verizon Wireless, which vigorously opposed Nextel's airwaves swap, has argued that any recalculation should be considered in an open proceeding, allowing objections to be filed.

"The public has a right to know when Nextel is trying to shave off hundreds of millions of dollars from its responsibility to the public safety community," said Steve Zipperstein, general counsel of Verizon Wireless.

Congress should consider requiring the FCC to hold an auction for the new airwaves Nextel wants, then use the proceeds to solve the interference problems quickly, Zipperstein said.

Reopening the case to public comment could delay adoption of a final plan by months. The FCC could also issue a decision without that input.

Nextel is asking the FCC to consider several other changes and clarifications to the proposal before the rules are finalized.

In a filing with the FCC on Friday, Nextel asked the commission for the right to continue using some of its existing airwaves until the transition is completed. It also asked the commission to allow it to negotiate deals with various groups that must move to clear out the airwaves, and it asked the FCC to take action against uncooperative parties.

Nextel shares closed yesterday at $23.06, down 89 cents.

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