WASHINGTON-Nextel Communications Inc., already up against strong opposition from the Justice Department and dispatch radio operators, faces a heavy legal burden in convincing a federal judge here to vacate a 1995 antitrust consent decree designed to protect competition in the specialized mobile radio market.
U.S. District Judge Thomas F. Hogan’s March 16 decision-allowing Nextel to fully develop its case for repealing the decree-was a big victory for the dispatch king. The challenge of actually getting the antitrust restrictions overturned will be greater.
The evidentiary hearing, expected in late May or early June, will be preceded by discovery, interrogatories and depositions in coming weeks. The case will put Nextel under the microscope of government antitrust lawyers and likely subject the McLean, Va., firm to intense scrutiny.
Under the Geotek Communications Inc.-Nextel asset purchase agreement, Nextel must get the decree lifted by about mid-June or the deal could collapse.
Nextel will have to make a persuasive case that changed circumstances, which it claims it did not foresee when it entered into the decree in 1994, now make the consent decree inapplicable. Hogan signed the 10-year decree in 1995.
Nextel, which controls more than half of the nation’s 3.6 million SMR subscribers, needs the decree lifted to complete the $150 million purchase of 191 900 MHz SMR licenses from Geotek in a bankruptcy auction.
The decree, triggered by Nextel’s acquisition of Motorola Inc.’s 800 SMR licenses and its 900 MHz SMR management contracts in 1993, bans Nextel from owning 900 MHz dispatch radio systems in 14 major markets.
Nextel is expected to argue that trunking alternatives in new bands-such as 220 MHz and below-512 MHz-have become available for SMRs and that rule changes allow mobile phone operators to provide dispatch.
But Nextel will have to prove it was unaware at the decree’s signing of the Federal Communications Commission’s intentions to open up more bands for dispatch and to let wireless carriers offer dispatch.
Justice and SMRs are expected to counter Nextel was fully aware of 220 MHz and below-512 MHz refarming proceedings and the move to mobile phone-dispatch when it agreed to Justice’s demand in 1994 that it stay away from 900 MHz SMR channels.
In addition, Justice likely will argue the relevant market at issue-insofar as antitrust analysis is concerned-is the dispatch market and not the bigger mobile phone market.
Nextel previously argued it has far less spectrum than AT&T Wireless Services Inc. and Sprint PCS, and those mobile phone giants are not restrained to the extent it is by the consent decree. In addition to its core dispatch business, Nextel offers digital mobile telephony and data messaging on cellular-like networks throughout the country.
A coalition of SMRs, led by Mobex Communication Inc., are taking an aggressive approach to the Nextel decree case. In addition to SMR licenses covered by the 1995 decree, the SMRs want Justice to extend its antitrust probe to those licenses in the Geotek transaction not subject to the decree.
“If Nextel is permitted to consolidate the 900 MHz band, like it consolidated the 800 MHz band, there never will be competition in the dispatch industry. This coalition is not about helping any particular competitor; it is about helping competition itself,” said John Reardon, director of the Alliance for Radio Competition and general counsel for Mobex.
Mobex, the No. 3 provider with 50,000 units, failed to outbid Nextel for Geotek’s licenses, despite offering to pay slightly more than Nextel for the 191 licenses.
