WASHINGTON-Nextel Communications Inc. said its antitrust settlement with the Justice Department will not interfere with plans to build a nationwide wireless network.
“While we do not agree that restrictions on our 900 MHz operations were at all necessary, the decree does not place any meaningful restrictions on our ability to accumulate spectrum for our 800 MHz digital system,” said Nextel Chairman Morgan O’Brien.
Under the Oct. 27 accord, which is subject to public comment and consideration by a federal court, Nextel must relinquish most of its 900 MHz specialized mobile radio channels in Boston, Chicago, Dallas, Houston, Denver, Los Angeles, San Francisco, Miami, Orlando, New York, Philadelphia, Washington, D.C., Detroit and Seattle.
Nextel, of Rutherford, N.J., also has to divest some 800 MHz SMR channels in Atlanta.
“This action is the best of all worlds for the consumer,” said Anne Bingaman, chief of Justice’s Antitrust Division. “It clears the way for Nextel to offer wireless telephone service with a new digital technology in competition with established cellular companies. At the same time, it ensures that businesses and individuals that need dispatch services will not be at the mercy of a single service provider.”
Justice said Nextel’s pending acquisition of Motorola Inc.’s SMR assets and management agreements would give Nextel control of almost all 800 MHz and 900 MHz SMR channels in 15 of the nation’s top markets, potentially setting up consumers for higher prices and reduced service quality.
In exchange, Motorola would get a 24 percent stake in Nextel and Nextel’s promise to buy SMR radio equipment from Motorola.
Motorola, besides being the largest mobile communications manufacturer in the United States, stands right behind Nextel as the nation’s second largest SMR operator.
Nextel plans to convert dispatch radio systems acquired around the country into advanced wireless networks that provide cellular-like mobile telephony. The first of these systems have been turned on in Los Angeles, the San Joaquin Valley and San Francisco.
Nextel also has agreed to acquire OneComm Corp., which holds 800 MHz SMR channels in 16 western states, and Dial Page Inc., which dominates the two-way dispatch radio business in the Southeast. Those transactions also are pending regulatory approval.
The FCC plans to auction 800 MHz SMR channels in the future to promote the development of wide-area wireless systems.
The Justice action still could have an indirect impact on Nextel, though. SMR channels at 900 MHz, partially intended to accommodate dispatch customers facing displacement as Nextel 800 MHz systems are converted to cellular-like systems, will no longer be available.
Some skeptics question whether Nextel has sufficient spectrum to deploy Motorola Integrated Radio System technology as an alternative to cellular communications. Nextel counters that enough 800 MHz channels exist to comfortably serve dispatch and MIRS subscribers.
Bugs in the pilot deployment of MIRS in Los Angeles were cited as one of the reasons MCI Communications Corp. canceled a planned $1.3 billion investment in Nextel.
Geotek Communications Inc., a Montvale, N.J.-based SMR planning to build 900 MHz systems around the country, had complained to Justice that by refusing to sell it 900 MHz channels, Nextel and Motorola would foreclose market competition.
Geotek also is experimenting with an SMR technology called frequency hopping multiple access that is used by the Israeli military.
“The whole [SMR] sector is being dominated by Nextel and Motorola,” said Yaron Eitan, president and chief executive officer of Geotek.
“We haven’t decided not to sell to them,” said Lise Farmer, a Motorola spokeswoman. “Geotek is on our short list of potential buyers.”
