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FCC approves spectrum swap for Nextel
By Paul Taylor in New York
Published: July 8 2004 18:45 / Last Updated: July 8 2004 18:45


The US Federal Communications Commission approved a controversial plan on Thursday that would let Nextel, the sixth largest US mobile network operator, swap radio spectrum that interferes with public safety communications for highly sought-after spectrum in another band where most carriers operate.


The decision, foreshadowed by Michael Powell, the FCC chairman last month, marks a significant victory for Nextel and will help the wireless carrier to continue its recent rapid growth.

It is, however, likely to face a legal challenge from rivals, including Verizon Wireless, the largest US mobile operator, which have characterised the plan as a "spectrum grab". Verizon has argued that such a swap would be illegal and called on the FCC to auction the spectrum.

Under the FCC plan, Nextel will receive a 10 megahertz swathe of spectrum in the 1.9Ghz band in return for giving up spectrum in the 800Mhz band that it shares with public safety organisations including police and firefighters.

In addition, the FCC ruled that Nextel must provide an irrevocable letter of credit for $2.5bn to ensure public safety radio's problems are solved. Nextel will also have to pay the costs of adjusting public safety equipment to work properly.

The plan is similar to the so-called "consensus plan" proposals put forward by Nextel and is designed to end a two and a half year battle that pitted Nextel against the rest of the wireless industry. That plan was supported by most public service organisations and many influential politicians eager to avoid the communications problems that were highlighted by the September 2001 terrorist attacks.

Nextel had valued the cost of giving up spectrum, replacing and returning public safety equipment in 800MHz band and clearing incumbents from the 1.9 GHz band at $5.41bn. But opponents claimed the plan represented a spectrum giveaway by the FCC.

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