The U.S. Court of Appeals for the District of Columbia Circuit recently ruled against Sprint Nextel in its dispute over when the nation’s third-largest carrier must vacate its interleaved channels in the 800 MHz band, which is being reconfigured to alleviate interference to public safety operations.

The FCC mandated that the channels be cleared by June 26. Sprint wanted the deadline extended, reasoning that no public safety licensees would be prepared to migrate to those channels by the deadline—indeed, the FCC has yet to establish a procedure for public safety entities to apply for slices of the interleaved spectrum—and that a premature migration would have a profoundly negative impact on its iDEN operations in the band.

The D.C. Circuit’s decision was a win for the FCC. Now that it has had a week or so to bask in its victory, the commission needs to forget the ruling and relax the deadline before it’s too late.

Some believe the ruling gives the FCC a club it can use against Sprint to speed up the rebanding process. While leverage always is a nifty thing to have at one’s disposal, I’m hard-pressed to see how this will make the carrier move any faster. Sprint already has all the financial incentive it needs. It has spent more than a billion dollars on rebanding thus far and believes it might spend as much as $3.4 billion before all is said and done. Every day that rebanding drags on costs Sprint a bundle.

Forcing Sprint to move its iDEN customers to other frequencies—even on a temporary basis—and then back to the carrier’s new 800 MHz channels will be pricey. Analysts have pegged the costs at between $1 billion and $2.8 billion. Even for a company the size of Sprint Nextel, that’s a significant number.

How might such a financial hit affect Sprint? For starters, it could force the carrier to significantly curtail capital investment, which would hurt it competitively against archrivals Verizon Wireless and AT&T Mobility, both of which recently announced aggressive rollouts of 4G platforms to be completed by 2010.

Sprint might pass some of the costs along to its customers. Or it could slash operating costs, which likely would result in significant job losses, something no one—especially those in Washington, D.C., who are seeking re-election this year—wants to see. Layoffs, in turn, would have a detrimental effect on network performance and customer service. All of this would hurt the carrier in the marketplace.

I have no idea whether FCC Chairman Kevin Martin aspires to higher political office. But if he does, I’m thinking he’s not going to want any of these scenarios on his resume, particularly when holding Sprint’s feet to the coals on this matter won’t appreciably speed up the rebanding effort.

Not only would cutting Sprint some slack be politically expedient over the long haul, it also would be equitable. Sprint has oft repeated its pledge to comply with the FCC’s requirement that it must vacate Channel 1-120 frequencies within 60 days of a request of a NPSPAC licensee. That should be enough.

E-mail me at gbischoff@mrtmag.com.