Subject: [NEXTEL-1] The Walkie-Talkie Revival

From: Marcel <[email-masked]>
Date: Thu, 17 Apr 2003 03:30:07 -0400

WIRELESS REPORT

The Walkie-Talkie Revival
By falling back on an old technology, the wireless industry hopes to
reach new customers.
By Matthew Maier, April 15, 2003

Proving just how pervasive the pack mentality is in business these days,
the nation's largest wireless carriers have
begun unveiling plans to differentiate their offerings by imitating an
old Motorola-designed radio technology. Known
as push-to-talk (PTT), the technology essentially turns phones into
walkie-talkies and has been a rare example of
innovation among the nation's largest network operators. Now, thanks to
their upgraded, next-generation
networks, companies like Alltel, AT&T Wireless (AWE), Sprint PCS (PCS),
and Verizon Wireless (VZ) are scrambling to
unveil their own PTT services.

Motorola engineers first designed the system back in 1995, and Nextel
(NXTL) started offering a version called Direct
Connect a year later. A hit with users in the construction,
transportation, and manufacturing industries, Direct
Connect has given Nextel a competitive edge. It's still the fifth
largest carrier in terms of subscribers, but Nextel
boasts some of the most profitable and loyal customers in the business.
With average revenues per user of about
$70 and turnover rates of just 2.1 percent, Nextel has become the envy
of its class. "About 97 percent of our
customers use Direct Connect," says Nextel chief technology officer
Barry West, an engineer who helped design the
system. "We have reintroduced the term 'walkie-talkie,' and our
customers really understand the value of the
product."

That explains why other wireless companies have recently started
launching PTT plans of their own. Sprint PCS chief
executive Len Lauer recently hinted that his company's strategy would be
to focus not only on business users -- a
Nextel stronghold -- but to also aim the service at families looking to,
say, coordinate dinner plans or summon the
kids home. Verizon Wireless hasn't revealed specifics yet, but at Legg
Mason's Telecom Conference in February,
company chief Dennis Strigl essentially chimed in with a "me too." "I
heard Len Lauer say he would have a
push-to-talk feature this year," Strigl said at the conference. "I will
tell you that is also in our plans." Meanwhile,
AT&T Wireless says it intends to test its PTT system in the Seattle area
later this year.

Implementing nationwide PTT offerings will not be easy. It will require
changes to both the handset and the network
-- changes that Nextel has never had to make, since Direct Connect was
designed with walkie-talkie functionality
from the get-go. Thanks to a cozy partnership with Motorola, Nextel uses
a technology called the integrated dispatch
enhanced network (IDEN). As the only carrier in the country using IDEN,
Nextel has had Motorola's undivided
attention for the last seven years, allowing the two to perfect the
necessary handset and network technology and
ensure that it works seamlessly.

The rest of the industry, however, is forced to rely on unproven
technologies on both the phone and network side.
Swedish networking giant Ericsson (ERICY) recently unveiled its Instant
Talk PTT network solution, and Samsung
announced that it will begin offering handsets later this year that
integrate a PTT technology developed by Togabi
Technologies. Concerned by the prospects of an extremely fragmented
market, Nokia (NOK), Ericsson, and Siemens
announced in February that they would begin developing an open standard
for using PTT over the next-generation
cellular networks currently being operated by most carriers.

In the meantime, Nextel will likely maintain its lead in this area and
perhaps even step up the barrage of Dennis
Franz ads touting its (still) unique service. Whether it will remain the
industry leader in PTT technology five years
from now is impossible to say. But with everyone rushing to copy an idea
it understood years ago, Nextel is the only
carrier that deserves credit for being truly innovative -- an
all-too-rare quality in wireless technology these days.

http://www.business2.com/articles/web/0,1653,48893,00.html