Nextel OK's $500M to TV Stations

Nextel CEO Tim Donahue today (Feb. 7) will approve a deal that gives TV stations up to $500 million for some special channels they the cell phone giant wants to use.

Nextel has until today to accept an FCC plan to hand the company a chunk of frequencies used by local TV news crews to beam live remotes back to their studios. In return, Nextel must compensate the stations, write a $2.2 billion check to Uncle Sam, and give some of its current cell phone spectrum back to the government.

Since the FCC’s final offer was floated in December, Nextel has been cagey about its plans to go forward and hinted it thought the government was demanding too high a payment. But Nextel has quietly indicated that it will sign on anyway by today’s deadline.

The deal was designed to benefit not only Nextel, but also TV stations and local emergency departments. Currently Nextel shares some frequencies with emergency communicators, and in many markets the channels are overcrowded. During major disasters,local officials say they sometimes can’t find enough open frequencies for fire, police and medical to talk to one another.

With homeland security topping the government’s agenda, making communications easier for safety officials has been a top FCC priority.

Nextel has offered to let local officials have their channels to themselves, but only if the company gets a portion of TV stations’ “backhaul” channels.

Since TV stations were already required to return part of the frequencies anyway, they’re happy with the deal because Nextel has agreed to cover the cost of new digital equipment needed to operate on their remaining smaller swath of spectrum. Broadcasters say the cost of converting or buying new equipment will be in the range of half-a-billion dollars.