The Federal Communications Commission late last night was leaning toward requiring Nextel Communications Inc. to pay $1.3 billion to $1.5 billion more than it had proposed for new cellular airwaves, according to FCC sources speaking on condition of anonymity.
The eleventh-hour discussions continued just hours before the FCC's monthly public meeting today, when all five members are scheduled to approve a plan.
The outcome of the FCC's decision is a critical one for Nextel, the Reston-based cellular phone company whose growth depends on getting new airwaves to transmit wireless calls and Internet traffic. Because of the way the company's current airwaves are set up, its cellular phone calls often interfere with fire and police radio-dispatch systems around the country. It proposed exchanging some of its existing airwaves for new ones, and paying for public safety groups to move to clearer airwaves.
FCC Chairman Michael K. Powell, hoping to win unanimous support for a solution, yesterday reverted to a previously discarded plan that would ask Nextel to give up existing spectrum and make payments totaling $5 billion -- or roughly $1.3 billion to $1.5 billion more than what the company proposed to pay, the sources said, declining to comment for the record until the commission votes publicly. Most of the additional payment would go to the U.S. Treasury.
Some commissioners had expressed concern that not requiring additional compensation would be seen as providing Nextel a financial windfall, the sources said.
Either way, the FCC's decision appears fraught with legal risk; Verizon Wireless, the nation's largest cellular provider, has vowed to sue if Nextel gets the new airwaves it wants, and some members of Congress have warned the FCC that it could be violating federal law by granting airwaves outside an auction process.
Analysts have said that any FCC decision is likely to get tied up in court challenges.
For the FCC, which has been trying to resolve the problem for more than 21/2 years, the challenge has been to find a solution that resolves the emergency communications interference while skirting some of the potential legal hurdles.
At one point, in early April, a three-member majority of the commission voted to require Nextel to pay $1.3 billion to $1.5 billion more for the airwaves than it had initially proposed. But Powell later pulled his vote, and last week the commission backed away from requiring additional payment from Nextel, after Verizon Wireless and its parent company argued that accepting such a payment would violate federal law against private sales of public property.
Until last night, the commission was poised to accept a plan allowing Nextel to simply swap some of its old spectrum for new spectrum and pay $850 million toward moving public safety groups to clear up the interference problem -- giving Nextel essentially everything it wanted at the price it wanted. That plan asked Nextel to put about $3 billion in reserve, in case moving public safety frequencies proved more costly than $850 million, but would have returned the leftover funds to the company. Both Powell and Commissioner Kathleen Q. Abernathy had voted via a secret balloting system to approve that plan.
But some commissioners feared granting Nextel the airwaves without additional payment would appear to Congress and Nextel's rivals like a giveaway of public resources, according to sources.
Nextel spokeswoman Leigh Horner and FCC spokeswoman Lauren Patrich declined to comment on the pending proceeding.
Staff researcher Meg Smith contributed to this report.