WASHINGTON-In the public forum, Nextel Communications Inc. speaks earnestly of a brave new
wireless world in which it could compete more favorably against AT&T Corp., Sprint Corp. and others if not for an
outdated 1995 antitrust decree designed to foster dispatch radio competition and to insulate the industry from predatory
conduct.
“Nextel has successfully transformed itself into a nationwide cellular telephone company, competing
aggressively against the original cellular duopoloy and the more recently licensed personal communications
services” carriers, Nextel boasted to U.S. District Judge Thomas F. Hogan in its Feb. 16 lawsuit to vacate the
decree.
Dan Akerson, chairman and chief executive officer of Nextel, declared Nextel’s analog dispatch roots do not
“provide a sound policy basis for treating Nextel differently from the cellular and PCS carriers with whom we
must compete.”
Private e-mail messages, however, show the premium Nextel puts on further strengthening its
dominant dispatch market position.
A July 24, 1997, confidential e-mail message between Akerson and Morgan
O’Brien, vice chairman of Nextel, lays out a strategy that would become a roadmap for Nextel’s $150 million purchase
of Geotek Communications Inc.’s 191 900 MHz specialized mobile radio licenses in a bankruptcy auction and its return
back to the federal judge who approved the decree in July 1995.
The e-mail was included in the Justice
Department’s written opposition to the decree’s repeal filed with the court.
O’Brien to Akerson: “To make
more clear the points I was trying to make Tuesday about our strategic position at 900 MHz:
Other than
Nextel’s iDEN system, the largest potential for a dispatch business is at 900 MHz: 200 trunked channels and 200
conventional-a total of 10 megahertz contiguous.
Sooner or later, these channels will be consolidated, by
someone.
Geotek has the largest spectrum position at 900 MHz. Sooner or later, they will fail and those channels
will hit the market.
Nextel’s core competence and differentiating factor in the wireless world is dispatch.
Digital
is a better dispatch (both voice and non-voice) than is analog. Digital, of course, is a much more efficient technology,
as well.
Motorola is unlikely to back away from the 900 MHz iDEN product. Perseverance is their hallmark.
The market place is not likely to give Nextel a free shot at the dispatch market forever. Sooner or later, some other
force will emerge. Most likely, it will come at 900 MHz.
The DOJ consent decree is vulnerable to attack. It is
faulty in logic and its major internal proponent is no longer around. If Geotek fails, the major external proponent of the
decree also goes away.
My conclusion: Despite the risks and headaches, the best strategic move for Nextel is get
in front of the 900 MHz digital technology and try to guide it in ways that complement our 800 MHz iDEN product.
We are the leaders of the two-way business and we have to keep fighting to stay in that position.”
O’Brien’s
reference to the “major internal proponent” of the decree is Anne Bingaman, who as former Justice antitrust
chief oversaw the 1994 antitrust settlement that Hogan would approve the following year.
Responding to O’Brien,
Akerson concurred, emphasizing Nextel had to control its destiny.
“I agree with everything you assert,”
said Akerson. “Can we fashion a proactive strategy, with one derivative? The two paths should be without
Geotek’s spectrum and with Geotek’s spectrum, i.e., if they fail. The outline you had the other day appeared to be built
on the basis that we need to solve the Industrial issue. Is there a better way? If so, let’s start positioning now. I would
like to continue the dialogue in this area. I agree it is critical that we control the
process.”
“Industrial” is a reference to Industrial Communications & Electronics Inc., an SMR in
Boston that, like most others, unsuccessfully bid for some of Geotek’s licenses.
