Nextel Must Pay at Least $3.2 Billion for Airwaves Verizon Wireless Decries 'Giveaway'
Federal Communications Commission Chairman Michael K. Powell emphasized the safety aspect of moving emergency frequencies.
(David Scull -- Bloomberg News)
By Christopher Stern Washington Post Staff Writer
Friday, July 9, 2004; Page E01
The Federal Communications Commission ordered Nextel Communications Inc. to pay at least $3.2 billion as part of a complex compromise that gives the wireless phone company a slice of valuable airwaves while freeing up crowded frequencies for public safety agencies.
The plan, approved unanimously by the FCC yesterday, requires Reston-based Nextel to give up airwaves it currently uses in exchange for other, more valuable spectrum.
In addition, Nextel must cover the cost of moving communications systems for thousands of police, fire and other emergency workers to new frequencies.
The compromise was not immediately embraced by either side in a 2 1/2-year dispute over the airwaves. Nextel, which would have to pay $1.5 billion to $1.7 billion more than it had proposed for the airwaves exchange, said only that it would have to study the details.
Rival Verizon Wireless, which led opposition to the deal, said in a written statement that the outcome was "a spectrum giveaway worth billions of dollars in lost revenues to the U.S. Treasury."
Nextel has estimated the cost of moving public safety operations and a small group of private users at $850 million. Verizon Wireless and other rivals say the cost will be much higher. As part of the deal, the FCC is also requiring the company to post a $2.5 billion letter of credit that can be tapped to pay costs of the frequency swap.
In a compromise worked out among commissioners late Wednesday night, Nextel will be required to make what the FCC called an "anti-windfall" payment to the federal Treasury to cover the difference if the total cost of moving itself and others to new frequencies is less than the estimated $4.8 billion value of the spectrum it would get in the deal.
Nextel would get credit for giving up its current airwaves, which the FCC estimates to be worth $1.6 billion, effectively leaving Nextel with a bill for at least $3.2 billion.
Public safety officials from across the country say they need the new frequencies because the ones used by Nextel customers often interfere with their emergency communications.
The plan put forward yesterday comes after a heated lobbying battle waged to sway public opinion and win allies at the FCC and in Congress.
