Federal Communications Commission Chairman Michael K. Powell has decided to support a plan giving Nextel Communications Inc. rights to cellular frequencies that the mobile-phone company wants, according to sources familiar with the decision.
The move marks a crucial victory for Reston-based Nextel, which has been lobbying for the airwaves in the 1.9-gigahertz frequency range, although the FCC is still determining what the company should pay in return. The decision involves airwaves worth billions of dollars and is critical to Nextel's future.
Federal Communications Commission Chairman Michael K. Powell's support could mean new frequencies and reduced interference for Nextel.
(Tannen Maury -- Bloomberg News)
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It's a bitter setback for Nextel's cellular-industry rivals, led by Verizon Wireless and Cingular Wireless, which have vowed to go to court to block Nextel from taking control of the disputed airwaves.
Powell's decision was described by sources at the agency and in the industry who declined to comment publicly until the FCC chief announces his stance.
Powell appears likely to win approval from the full commission: Three of the five commissioners backed Nextel's position in an initial vote in April, and sources said the commissioners are seeking unanimous agreement.
Nextel, which has 13.4 million subscribers, now carries phone calls using slivers of airwaves interspersed with frequencies used to carry police and fire dispatch calls. That tangled setup often causes public safety radios to go fuzzy or drop calls.
New airwaves would reduce the interference, while making Nextel a much stronger competitor in the cutthroat wireless industry because it could carry more cellular and Internet traffic.
"We have been focused on this problem from one perspective, how to fix the interference problem for public safety. And to do it in a way that doesn't provide an excessive windfall to any one company but gets the problem solved," Powell said yesterday on CNBC's "Kudlow & Cramer" program. "We believe we have come close to figuring out how to do that, and we'll get that decision out to the market soon."
To make its case before regulators and Congress, Nextel hired a dozen lobbyists -- including former high-ranking congressional and FCC staffers -- and spent the past 2 1/2 years trying to persuade the commission to accept its plan. It periodically sweetened the deal by offering to pay more money and give up more of its existing airwaves. In recent weeks, the company took a hard-line stance, telling the FCC it would mount its own legal challenge if it didn't receive the airwaves it wanted.
Still, the commission isn't prepared to hand Nextel a wholesale victory. How much Nextel will have to pay -- both to help relocate public-safety groups to less congested airwaves and to compensate for Nextel's new airwaves -- is still under negotiation, according to sources familiar with those discussions. A final decision appears likely in early or mid-July.
