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Nextel vexes Verizon with $5bn spectrum swap

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In what the FCC chairman Michael Powell described as "the most difficult, complex and challenging issue" he's faced since taking the job seven years ago, Nextel has agreed to relocate its service onto new spectrum. The issue of interference in Nextel's 800 MHz band has alarmed the emergency services for several years. But the deal with the FCC hasn't come cheap, nor without continuing rancor.

Nextel will pay the government $4.8bn for two blocks of spectrum in the 1.9Ghz range, the FCC announced yesterday. Nextel is selling and releasing some of its 800MHz spectrum and all of its 700 MHz spectrum, which interfered with radio signals used by the police and emergency services. Nextel will receive $1.6bn for the spectrum it is returning. The deal is complicated by what the FCC calls an an "anti windfall tax" to ensure Nextel complies without lining its own pockets.

The agreement was criticized by telco trade body the CTIA, which argued that the 1.9Ghz spectrum should instead have been auctioned. Verizon wanted this most badly, and has been leading the charge. Without naming names, FCC chairman Powell referred to "some of the most ruthless lobbying I have ever encountered".

Verizon is now expected to invite Nextel to step outside - and into a courtroom, to resolve the case.

With a glimpse of what squabbles we could expect from a deregulated spectrum regime, the FCC noted that "reliance on voluntary measures alone" had proved insufficient. ®

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