Bandwidth Bonanza

Communications Today, June 15, 1999

Nextel Communications [NXTL] reached an out-of-court settlement with the U.S. Department of Justice (DoJ) that will allow the company to begin operating on 900 MHz frequencies in 14 major U.S. markets as of Oct. 30, 2000 -- five full years earlier than stipulated under a four-year-old consent decree.

Nextel, under pressure from a competition-minded DoJ, agreed in 1995 not to obtain more spectrum but then sued the agency last February because the decree prevented it from buying 191 licenses in the 900 MHz band from defunct SMR operator Geotek for $150 million. Ken Hyers, a Cahners In-Stat Group analyst, said the deal will help Nextel with capacity constraint problems inherent in iDEN, the spectrally inefficient digital SMR technology developed by Motorola [MOT]. Nextel said it expects to use additional 900 MHz channels in association with an "expanded-band" version of iDEN capable of operating at both 800 MHz and 900 MHz that Motorola is working on. The FCC earlier this month approved transferring the licenses from Geotek into the eager hands of Nextel. Smaller SMR operators seeking to compete against Nextel, however, may cry foul over this latest turn of events -- not that this has gotten them anywhere in the intervening years since the consent decree.