Subject: [NEXTEL-1] FIRST CALL RESEARCH NETWORK- Wireless Telecom Services Update - March 21, 2003

From: Marcel <[email-masked]>
Date: Fri, 04 Apr 2003 09:44:11 -0500

FIRST CALL RESEARCH NETWORK

08:36am EST 21-Mar-03 Jefferies & Company (Ben Abramovitz, Wireless
Telecom Services - Take-Aways from CTIA (3/21/03) (1 of 2)

** JEFFERIES
Wireless Telecom Services Update - March 21, 2003

Ben Abramovitz, CFA
Take-Aways from CTIA

Earlier this week, we attended the annual CTIA conference in New
Orleans and have highlighted below what we believe are key issues that
investors wanted to learn from the conference. In our opinion,
Push-to-Talk (PTT) and
Line Number Portability (LNP) address both the competitive and
regulatory
front, respectively, which the industry will face before year-end.
Below,
we have condensed some of our conclusions on these issues.

Push to Talk Demonstrations Indicate Availability by Year-End. While
several carriers have been stating that push-to-talk (PTT) would be
available by year-end, CTIA was our first opportunity to witness
demonstrations.
The product is being built as a data application using servers. This
should provide carriers with some flexibility in how quickly they deploy

the service, but, more important, it should allow PTT users to converse
across
carriers at some point, and across the U.S. immediately. As such, we
believe
that PTT should be available by late third quarter or early fourth
quarter.
We believe that most carriers intend to initially deploy the product as
an
intra-carrier service, which in our opinion, may lead to slower initial
adoption by
consumers (much like initial SMS uptake prior to inter-carrier
availability).

Nonetheless, we believe PTT introductions are not likely to
significantly impact Nextel's churn rate, as some investors believe,
unless the
service can be used inter-carrier between a current Nextel subscriber
and its
competitors.

Nextel's core customer base is made up of several companies that use
various PTT workgroups at different times. As such, these various
companies
have different contract renewal periods, with any one company likely
unwilling to disconnect Nextel service, which would result in getting
cut off
from other Nextel users with whom they work. However, PTT is likely to
lower
expectations for Nextel's future customer growth.

Latency times for call setups we believe will be acceptable to
users. Mobile Tornado's product has a set-up time of 1.3 to 2.1 seconds
for CDMA
and 1.8 to 2.6 seconds for GPRS, with an additional one second needed
for the
initial voice transmission (we believe the CDMA demonstration was using
Sprint's network). While the initial latency was perceivable, we don't
believe it would be a deterrent to customers if accompanied by faster
data speeds and
better wireless coverage areas.

Line Number Portability Possibly Not Implemented in 2003, in Our
View. While we have been largely undecided on whether Line Number
Portability
(LNP) would be implemented in November and consensus opinion is that it
will be
implemented, we surprised ourselves that following CTIA we
increasingly believe that LNP may not be implemented this year. Too many

questions remain about the specifics of porting customer numbers. While
the FCC is
likely to continue to pursue its November deadline, we believe that the
brewing legal battle could likely lead to an additional delay of
implementation.
Just to be clear, we believe the wireless operators will need to spend
the
money for implementation, regardless of a delay, as any decision is
unlikely
to occur until the latter half of the year. Investors will likely begin
to
receive some clarity on implementation during mid-April, as oral
arguments will
be heard regarding LNP implementation.

GSM Equipment Pricing Remains Weak. Based on several conversations
we had during the course of the conference, we believe that equipment
pricing for GSM equipment remains weak and might have further declined
as Cingular
Wireless ramps up its efforts to deploy GSM nationally. We believe this
weakness bodes well for the GSM carriers' capital expenditures during
2003 and the
overall cost to deploy the network.

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