After months of complicated negotiations, broadcasters and wireless carrier Sprint Nextel appear to have reached an agreement on how Sprint Nextel will reimburse them for new digital microwave gear. The pact would allow stations to vacate spectrum they have been using for electronic newsgathering (ENG), freeing it up for Sprint Nextel’s use.
Over the past two months, industry trade group Association for Maximum Service Television (MSTV) and lawyers working on behalf of several station groups have crafted a rough template for a “Frequency Relocation Agreement” (FRA) that stations and Sprint Nextel can work with, says MSTV President David Donovan. The roadmap gives the industry a fighting chance of making the FCC’s September 2007 deadline for the spectrum switch.
“We believe it’s a significant step, that we have a frequency-relocation template that the industry can use,” said Donovan at MSTV’s annual meeting during the NAB show.
The process, known as “2 GHz Relocation,” is the result of a $4.8 billion agreement the FCC brokered with Sprint Nextel in February 2005. The deal moves some of Sprint Nextel’s operations out of the 800 megahertz (MHz) frequency band, where its signals were interfering with public-safety communications, and into part of the 2 gigahertz (GHz) band, which broadcasters use to send both live and taped feeds from their trucks to the station.
Broadcasters will move off existing ENG channels and use new digital microwave gear to continue operations in a smaller swath of microwave spectrum.
Sprint Nextel must spend roughly $500 million on the digital ENG gear. It will give back spectrum valued at $2.1 billion and also write the federal government a check for $2.2 billion.
While Sprint Nextel has been working to coordinate the spectrum relocation and broadcasters have taken labor-intensive inventories of the microwave-transmission gear that needs to be replaced, negotiations had bogged down over the past year over legal issues, specifically what sort of accounting treatment broadcasters will be able to apply to the new gear and their subsequent tax liabilities.
Since broadcasters are giving up part of the spectrum while getting new equipment, they would like the process to be treated as “like exchange,” which would ease their tax burden. They’re currently waiting for the Treasury Department and the IRS to evaluate stations’ tax liabilities but are moving forward on the technical front, with what Sprint Nextel VP Michael Degitz describes as a “much simplified FRA.”
A total of 778 stations are already engaged in the 2 GHz Relocation process, according to Degitz, and some 663 have completed inventories and sent them to Sprint Nextel. Thirty-five deal packages are currently under review, and 21 relocation agreements have been completed.
Just before NAB, the ABC station group and Sprint Nextel announced that they have agreed to an FRA for each ABC-owned station and a Group Reimbursement Agreement covering ABC’s station group 2 GHz relocation-related expenses. With the FRA template in place, more deals should follow.
“Last week, I personally approved nine new deals,” said Degitz at the MSTV meeting. “Things are picking up rather quickly.”
A Boon For Suppliers
Microwave vendors are also expecting a big increase in activity this spring. With the first wave of stations due to be converted by September, the NAB show represented the last chance for broadcasters to evaluate digital microwave gear before selecting vendors. Poway, Calif.-based Broadcast Microwave Services is already readying its product line for a slew of new orders, says Product Manager Thomas Smith.
“We’ve been warned by [Sprint] Nextel this was going to happen,” he says. “I expect the floodgates will open after NAB.”