Nextel Communications Inc. will pay nearly $5 billion in both cash and spectrum to gain access to spectrum in the 1.9 GHz band, according to a plan adopted Thursday by the Federal Communications Commission to solve public-safety interference in the 800 MHz band.
FCC Commissioner Kathleen Abernathy said the plan was “costly, complex and critical.”
The FCC has valued the 1.9 GHz spectrum at $4.8 billion. It has valued the 800 MHz and 700 MHz band spectrum that Nextel will relinquish as part of the reconfiguration at $1.6 billion. Nextel is required to secure a letter of credit for $2.5 billion to pay for the relocation costs of public-safety, private wireless, other ESMRs and the broadcast auxiliary service.
If the relocation costs, including Nextel’s own costs plus the value of the spectrum it relinquishes, is less than $4.8 billion, Nextel will pay an anti-windfall payment to the U.S. Treasury. Concerns have been expressed by Verizon Wireless and others that Nextel was receiving valuable spectrum for less than it is worth. By assessing an anti-windfall payment, the FCC hopes to quiet those complaints.
However, the Cellular Telecommunications & Internet Association released a statement criticizing the decision. “Giving up such valuable spectrum without a public auction means the U.S. Treasury is losing billions of dollars. Those funds could’ve been used to provide public safety with money to make much-needed improvements in the vital care it provides all of us,” said CTIA President Steve Largent.
