Moving the US Defence Department and 11 other government agencies' wireless communications to new airwaves will cost almost $936 million, according to a government estimate released on Wednesday.
The Federal Communications Commission plans to auction 90 Megahertz of airwaves potentially next year, including the government frequencies, and wireless companies are expected to bid for them so they can offer new and improved services, like video and high-speed Internet access known as broadband.
Proceeds from that auction would be used to cover those costs the government agencies incur from moving operations.
Michael Gallagher, who heads the Commerce Department's National Telecommunications and Information Administration which worked on the cost estimates, said they were less than estimates of several billions of dollars.
"We need to make sure the industry has the resources" for new services, he said in a telephone interview. The additional airwaves will help carriers "to be the broadband competitors of tomorrow."
The airwaves could also be used to expand coverage and improve cell phone service quality.
It could take some agencies more than four years to move 2,240 frequency assignments though most will be completed within three years, Gallagher said.
There are roughly 201 million wireless subscribers in the United States and companies like Cingular Wireless and Verizon Wireless are rolling out new services like high-speed Internet and video accessible on mobile devices.
"This report should help pave the way for a June 2006 auction of 90 Mhz of spectrum for advanced wireless services," said Steve Largent, president and chief executive of CTIA, a trade association for the wireless industry.
The FCC is currently working on the procedures for the sale. The bands to be sold at auction include 1710-1755 Mhz and 2110-2155 Mhz.
A law signed last year provides for the proceeds from the auction to cover the relocation costs for the government agencies. But the FCC sale can only be completed if the proceeds bring in at least 10 percent more than the costs to relocate the government operations.
The biggest cost is expected to be moving the Defence Department, at almost $289 million, followed by the Justice Department at approximately $263 million. Other agencies switching airwaves include the Energy Department, Federal Aviation Administration and NASA, among others.
The last major FCC commercial wireless airwaves sale, concluded in February, raised $2.25 billion.
Cingular Wireless, the No 1 US carrier, is a joint venture of BellSouth Corp and AT&T Inc, Verizon Wireless is the No 2 provider and a joint venture of Verizon Communications and Vodafone Group Plc.
Representatives of the two carriers declined to comment.
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