Sprint Nextel has lost its legal fight to hang onto certain bands of wireless spectrum a little longer. The company has already had three years to change places with the public safety agencies designated to take over the channels, but its progress has been plodding.
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A federal appeals court on Friday said regulators were reasonable in sticking to a June deadline that requires Sprint Nextel (NYSE: S) to vacate some wireless channels that will be used by public safety agencies.
The Federal Communications Commission is requiring Sprint, the nation's third-largest wireless carrier, to clear certain channels by June 26, a move designed to eliminate radio interference with thousands of public safety agencies across the country. The company would essentially swap spectrum with the public safety agencies.
Jessica Zufolo, a telecom analyst with Medley Global Advisors, said in a note that the court's decision is a "significant defeat" for Sprint, but expects the FCC will extend the deadline by at least another six months.
Ready to Relocate?
The deadline given to Sprint was set three years ago. However, last September the FCC, unhappy with the slow progress, told Sprint it must clear out regardless of whether public safety agencies are ready to move out of their spectrum.
Sprint, which said the FCC's new position was unreasonable, claimed if regulators enforce the deadline it would cripple the network . The FCC has not established any fines and telecommunications analysts said they expect the deadline would be extended.
Sprint, which has spent more than US$1 billion in its spectrum relocation efforts so far, said the initial 2005 order considered a simultaneous swap with public safety agencies. However, the FCC argued in September that the deadline applies to Sprint regardless of whether public safety agencies are ready to swap.
Reston, Va.-based Sprint, which has operational headquarters in Overland Park, Kan., appealed to the U.S. Court of Appeals for the D.C. Circuit, which ruled that the FCC's June 26 deadline was reasonable.
"That deadline -- which was never premised on a synchronized spectrum swap -- has not changed," according to the court's ruling. "What has changed are the implications of the deadline: It now appears Nextel might have insufficient spectrum come June because numerous ... [public safety] licensees won't be ready to relocate."
Resolving Interference Issues
The court said if Sprint vacates those channels then it's likely it will immediately reduce radio interference that public safety agencies have experienced.
FCC spokesperson Robert Kenny said the agency is pleased with the decision and will continue to focus on clearing the spectrum for public safety agencies and resolving the interference issues.
However, there appears to be some flexibility for Sprint, which said in a statement it was disappointed with the court's ruling.
The company has requested waivers to remain on the channels because more than 500 public safety agencies aren't ready yet to make the transition. Sprint said it's agreed to provide spectrum to the agencies within 60 days of when they are ready to make the switch.
Shares of Sprint added 7 cents to $7.96 in after-hours trading Friday after it dipped 13 cents to close at $7.89 in the regular session.
to vacate some wireless channels that will be used by public safety agencies.
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