FCC OKs Plan to Swap Nextel's Bandwith

WASHINGTON (AP) -- A plan aimed at ending cell phone interference that has affected hundreds of public safety systems around the country won approval Thursday from federal regulators.

The Federal Communications Commission's unanimous decision, which gives Nextel Communications Inc. access to a valuable new piece of broadcast spectrum, was denounced by the cell phone industry's lobbying group and Verizon Wireless, the nation's largest cell company. They said it amounted to a taxpayer giveaway to Nextel worth billions of dollars.

The FCC voted to give Nextel spectrum worth $4.8 billion. In exchange, the Reston, Va.-based company will give up other spectrum and pay to reconfigure the airwaves it currently occupies to ensure public service communications systems are free of interference.

The reorganization would have to be completed within three years.

Nextel offered a muted response to the plan, which could end up costing the company some $1.5 billion it had not expected to be charged.

``We have an obligation to review all aspects of the decision to fully understand the implications to Nextel's shareholders,'' the company said.

Radios used by police, firefighters and other first responders currently broadcast on the same 800 megahertz spectrum as Nextel cell phones. So if a radio dispatch is made at 850 MHz near a Nextel cell tower broadcasting at 851 MHz, the radio signal can be drowned out.

No injuries or deaths have been reported, but public safety officials have said personnel are endangered any time they respond to a call and cannot communicate.

FCC Chairman Michael Powell said public safety was the agency's paramount concern.

``We admit there are risks in the action that we take today,'' he said. ``But they seem to me to pale in comparison to the risks that our first responders face each and every day. This crystal clear fact demands that the government rise above the normal battles of commercial self interests and simply find a solution.''

The commission could have offered Nextel less valuable spectrum at a higher frequency _ an idea Verizon and other cellular companies supported. The agency also could have ordered Nextel to pay to clear up the interference on a case-by-case basis.

Verizon Wireless has threatened to challenge the plan in court. It contends the 1.9-gigahertz spectrum that Nextel would acquire should be offered at public auction. Verizon has said it would be willing to pay $5 billion.

``Instead of seeking a lawful appropriation from Congress to finance the work of untangling public safety's frequencies from Nextel's interference, the FCC has pushed ahead while serious legal questions'' remain, the company said in a statement.

The Cellular Telecommunications and Internet Association, a trade group representing wireless carriers, also opposed giving Nextel the 1.9-gigahertz spectrum.

The General Accounting Office, at the request of Sen. Frank Lautenberg, D-N.J., has opened a review of the FCC plan to see if it violates laws governing the private sale of public resources. Verizon Wireless is based in Bedminster, N.J.

Public safety agencies started complaining about the interference five years ago and turned to the FCC for help. The Association of Public Safety Communications Officials, based in Daytona Beach, Fla., says hundreds of agencies nationwide have had difficulty making radio calls, or have had communications disrupted because of cell phone interference.

The plan is valued at $4.8 billion. The FCC will deduct from that figure the cost of reorganizing the spectrum Nextel is vacating and clearing its new airwaves in the 1.9-gigahertz range. Nextel has offered to pay about $1.3 billion for the rebanding, but the agency will make Nextel set aside $2.5 billion in case costs run over.

The commission also will credit Nextel for the value of the spectrum it is returning for public safety _ estimated to be about $1.6 billion. In the end, Nextel could end up paying $1 billion to $1.9 billion for the new spectrum, depending on how much it must pay to reconfigure its old and new airwaves.

Nextel had lobbied hard for the 1.9-gigahertz spectrum, but had not offered to pay for it. Instead, it backed a straight swap of the old airwaves for the new ones.

Separately, Verizon announced Thursday that it had purchased for $930 million a swath of spectrum in the 1.9 Ghz band auctioned off by NextWave Telecom Inc. The spectrum covers the New York City area and portions of New Jersey.

Nextel's stock fell 88 cents to close at $25.52 on the Nasdaq, while Verizon slipped 59 cents to $35.48 on the New York Stock Exchange.

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