WASHINGTON-Nextel Communications Inc., admonished by the Federal Communications Commission for alleged marketing misrepresentations that could-if continued-lead to hefty fines or revocation of licenses, has ordered its sales force not to use pressure tactics or make misleading statements to sign up customers on its digital wireless networks.
“The FCC has stated that, if we do not take greater care in representing and selling our services, they will take measures against Nextel such as imposing multimillion-dollar fines or revoking of frequency licenses if additional instances of misconduct come to their attention,” Nextel told employees in a July 9 bulletin.
The reprimand was prompted in part by a June 15 ruling in which the FCC rejected Norcom Communications Corp.’s petition to cancel specialized mobile radio licenses in New Jersey and New York that Nextel bought in late 1997.
McLean Va.-based Nextel, which dominates the SMR industry, captured 475 of the 525 licenses bid in that SMR auction.
Nextel declined requests for comment.
While finding that Nextel’s practices “appear to mislead and/or unduly pressure existing customers to undertake the substantial additional expense of subscribing to Nextel’s digital service,” the FCC said the record was insufficient to determine that Nextel lacks basic licensee qualifications.
Norcom said Nextel applied pressure and made misleading statements in order to lure 800 MHz analog customers over to Nextel’s more- sophisticated digital system.
In May, the FCC launched a probe into Nextel’s policy of denying resale in spite of the requirement that it must until the resale law sunsets in five years. Nextel-claiming technical problems related to its analog-to-digital nationwide network buildout and capacity constraints prevent resale-insists no regulations have been broken. Wireless telecom bureau officials downplay the investigation.
“We take this opportunity to admonish Nextel because the [Wireless Telecommunications] Bureau has, over the past year, received several informal complaints regarding Nextel from areas throughout the country that are consistent with Norcom’s allegations,” said the FCC order signed by wireless bureau chief Dan Phythyon.
The FCC in June again rejected a challenge to Nextel licenses in Arizona, Florida, Michigan, Virginia and West Virginia from a Michigan reseller that claimed Nextel violated FCC resale rules. The FCC said One Source Communications Inc. did not have standing because it did not bid against Nextel for SMR licenses.
Norcom did not bid against Nextel for SMR auction licenses either, but the FCC did not rule Norcom lacked standing.
Nextel aggressively has been moving to add customers to digital networks around the country, which offer an integrated package of dispatch, mobile phone and data services, in order to strengthen a financial position that is caught between rising revenues and wider quarterly losses.
Nextel’s July 9 marketing bulletin is quite specific in its instructions to employees, having a chart with a `Do not say …’ column and `You can say …’ column.
The bulletin tells sales people not to say:
Nextel will be the sole surviving provider of 800 MHz services.”
Nextel has purchased all of the 800 MHz spectrum in the country.”
The FCC has outlawed all analog 800 MHz dispatch services.”
Your current provider of dispatch services will soon be out of business. Nextel will soon be your only communications choice.”; and
Your existing Motorola analog equipment is useless.”
Such Nextel statements cropped up in Norcom’s petition to deny Nextel’s license applications.
“I don’t view that very well,” said Alan Shark, head of the American Mobile Telecommunications Association.
Shark said any such misrepresentations were likely due to over-ambitious sales people at Nextel. At the same time, he added, “I’m totally against that [misrepresentations].”
“I can’t imagine this is corporate policy. They don’t have to stoop to that level,” said Shark.
Nextel, viewed admirably and otherwise as one of the industry’s top mavericks, left the Cellular Telecommunications Industry Association last year because of differences over representation on certain policy issues.
