May 2, 2008 / 7:47 PM / 9 years ago

UPDATE 2-U.S. court backs FCC deadline for Sprint rebanding

(Adds analyst comment, FCC comment, share price update)

WASHINGTON, May 2 (Reuters) - A federal appeals court on Friday ordered Sprint Nextel Corp (S.N) to meet a June 26 deadline to vacate airwaves it uses that are close to public safety agency networks, a decision Sprint said could be costly and disruptive to its wireless service.

The ruling upheld a Federal Communications Commission order for Sprint Nextel to leave certain channels on the 800 megahertz band by the deadline in order to eliminate interference between its network and public safety systems.

Sprint, which has been losing customers amid service and network problems, asked for waivers to the deadline and offered instead to leave the channels in question within 60 days after each public-safety organization says it is ready to retune its system.

But the U.S. Court of Appeals for the District of Columbia Circuit said on Friday the FCC's decision to hold Nextel to the June 26 deadline was reasonable.

"If Nextel completely vacates its general category channels on June 26, there is reason to believe it will immediately reduce interference experienced by public safety licensees already operating in that portion of the band," according to the opinion from the Court.

The court said the airwaves were plagued by interference problems stemming from an "incompatible mix" of systems.

FCC spokesman Robert Kenny said in an e-mailed statement that the FCC was pleased with the decision and would "continue to focus on clearing this spectrum for public safety," citing interference issues in many regions of the country.

Stifel Nicolaus analyst Rebecca Arbogast said that while the ruling would allow the FCC to continue to put pressure on Sprint, it would not likely force Sprint to vacate all the airwaves in question immediately on June 26.

"I think what they'll do is keep Sprint on a short leash," the analyst said. "What they'll end up doing is saying that they can stay there until public safety is ready to use it."

Sprint said it was disappointed with the decision and looking to see what its options are.

"We're in the process of reviewing the decision and determining the best way to move forward that will ensure reconfiguration moves forward while at the same time balancing the needs of our customers," Sprint spokesman Scott Sloat said.

The company had said in its most recent annual report that if it were not successful in the court action, its total rebanding costs could be more than $3.4 billion, including $1.1 billion it has already spent. If it won the decision, it had estimated the cost at $2.7 billion to $3.4 billion.

Shares of Sprint fell 13 cents, or 1.6 percent, to close at $7.89 on the New York Stock Exchange. (Reporting by Julie Vorman and Rachelle Younglai in Washington and Sinead Carew in New York; Editing by Brian Moss and Braden Reddall)

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