FCC Does Nextel Deal

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Broadcasters were cheering the Federal Communications Commission's controversial decision Thursday to hand wireless company Nextel Communications a coveted patch of communications frequencies.

Some of Nextel's new channels are currently used by local broadcasters to transmit news coverage from remote locations back to their stations.

Nextel has promised to compensate TV stations for the cost of buying new digital equipment that will accommodate the smaller channels that must be phased in on stations' remaining newsgathering channels. Broadcasters are obligated to begin relinquishing a portion of their remote newsgathering channels this year.

Previously, satellite communications companies were slated to get all the channels and were obligated to reimburse stations for the costs of switching equipment. Because of the satellite companies' shaky finances, however, broadcasters worried that they would lose the spectrum without getting paid.

Now, with wealthy Nextel promising to pay up, stations no longer have to worry about fronting costs that won't be reimbursed.

Nextel's takeover of newsgathering channels is part of a larger plan requiring the company to give up spectrum it is currently using on the 800 MHz portion of the radio spectrum so police, fire and other public safety departments around the country can use it. The public safety issue was a prime mover behind the commission's decision to strike the Nextel deal.

Besides ensuring that emergency workers can use the channels without interference from cell phones, the plan "has the added benefit of helping to preserve local news coverage," says David Donovan, president of DTV trade group MSTV. " Today the FCC established an orderly procedure for compensating and relocating local stations from valuable spectrum."

The total cost to the TV industry for buying new or returning existing newsgathering equipment is estimated at  $512 million. The bulk of Nextel's estimated costs will go to relocate public safety departments around the country to the 800 MHz frequencies Nextel is giving up.

If Nextel's reimbursement costs plus a credit for the value of the spectrum it is giving up don't total $4.8 billion--the amount the FCC figures is the value of Nextel's new home--the company will be required to cover the balance by writing an "anti-windfall" check to the U.S. Treasury.

Verizon and other mobil phone carriers oppose the plan as a giveaway to Nextel and want the 1.9 GHz spectrum auctioned.

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