Subject: [NEXTEL-1] Timmy speaks on spectrum, technology and consolidation

From: [email-masked]
Date: Tue, 27 Apr 2004 19:53:57 -0400

Timmy speaks on spectrum, technology and consolidation.

by DAN MEYER

April 26, 2004

Few wireless executives have had as much of an
impact on the industry over the past several years
as Nextel Communications Inc.'s Tim Donahue,
who - despite running the smallest of the six
nationwide carriers - has managed to garner
significant influence over larger competitors looking
to imitate Nextel's profitable business model.

Since adding the chief executive officer title to his president duties
in 1999,
Donahue has guided Nextel to an enviable position of regularly posting
strong
financial and operational metrics, including consistent growth,
industry-leading
customer revenue and stable churn results. Indeed, most important for an

industry saddled with huge debt, Nextel has provided a monetary return
for
investors.

While Donahue has led Nextel to its current position as one of the most
highly
regarded carriers among the financial and analyst communities, his
leaderships
skills are expected to be tested over the next several years by a number
of
issues facing Nextel. At the top of that list are Nextel's attempts to
gain
support for the controversial spectrum realignment Consensus Plan,
implementing
the carrier's next-generation technology path and guiding Nextel through

industry consolidation.

The most pressing issue currently facing Nextel is the ongoing attempt
to get
Federal Communications Commission approval for the Consensus Plan. While
the
plan has support from a number of public-safety groups, it is furiously
opposed
by most of Nextel's wireless competitors and the Cellular
Telecommunications &
Internet Association, which is backed by its own selection of
public-safety
agencies. With recent reports out of Washington indicating growing
support from
government for the Consensus Plan, Donahue said he remains confident the

proposal will be approved in the near future, and Nextel is prepared to
move
ahead with the details of the plan.

"From my perspective the FCC clearly understands the only solution for
public-safety interference is re-banding at 800 MHz, and I think
everybody has
come to understand that this is not a fix with filters," Donahue said,
countering claims by Consensus Plan opponents. "I think the proposal we
have put
on the table today is a fair proposal given the spectrum we'll be
turning in and
the value of that spectrum and what we paid for that spectrum vs. the
value of
the 1.9 [GHz spectrum]. Obviously there are others who don't agree with
that,
but that's what makes the world go round."

Donahue added that he understands the opposition to the plan from both
Nextel's
competitors as well as a trade organization that counts Nextel as a
member,
though he questions the reason for such opposition.

"I think Steve [Largent, CEO of CTIA] has to answer to his trade
association and
unfortunately for public safety, most of CTIA's members are against the
Consensus Plan because they are not thinking of public safety and
instead are
thinking about is this fair for Nextel to get 10 megahertz of 1.9 [GHz]
spectrum," Donahue noted. "Unfortunately for CTIA and the opponents of
the
Consensus Plan they are not putting the best interest of public safety
first.
CTIA is just reacting to their membership and in that regard I
understand it. Am
I happy about it? No. But I understand it."

Donahue added that while he is aware of reports that the FCC is looking
at
possibly increasing Nextel's financial obligations if the Consensus Plan
is
approved, Nextel has yet to receive any word on modifications to its
original
plans to contribute $850 million to the re-banding efforts.

"We have a deal on the table and have not had any further conversations
with the
FCC about any changes to that deal," Donahue said. "While we understand
it's
pending, we don't know exactly what the outcome will be because they
have not
talked to us about it yet. We expect to have those conversations in the
next
couple of weeks."

If the Consensus Plan is approved, Nextel likely would have more options
for
launching third-generation services because the 1.9 GHz band would
provide the
carrier clear spectrum to launch any number of high-speed wireless
technology
choices.

Nextel is testing Flarion Technologies Inc.'s Flash-OFDM technology in
North
Carolina as a possible high-speed wireless complement to the carrier's
iDEN
packet data-based network. Donahue said its iDEN technology is scheduled
to
receive a Wi-DEN update by the end of this year that will increase
network
speeds to match that of CDMA2000 1x-based networks. Despite the recent
increase
in coverage of the Flarion trial, Donahue said the carrier is looking at
a
handful of different wireless broadband initiatives including CDMA-based

technologies that he said would leapfrog anything currently available.

While Nextel has yet to commit itself to any one technology path,
Donahue
remains a firm believer that wireless broadband services will play an
important
role in the carrier's future.

"The whole issue of broadband is interesting to me. I don't think it's a
matter
of if, it's a matter of when," Donahue said. "What we're trying to do is
to
figure out what it is customers are going to want, what speeds are they
going to
demand, what can a big pipe do for a company like Nextel in terms of
content and
attracting content providers, and we feel very positive about the early
results
from a technology perspective and the early results from a
customer-acceptance
perspective. We're jazzed about it."

Donahue added Nextel's wireless broadband plans will not depend on
attaining
spectrum as part of the Consensus Plan, noting the carrier has cleared
spectrum
in the 800 MHz bands as well as the possibility of tapping into the
carrier's
vast 2.5 GHz spectrum holdings, which amount to an average of 96
megahertz in 67
of the country's top 100 markets.

Donahue also showed support for the recent consolidation activity in the

industry, noting fewer competitors likely would strengthen those that
remain as
uncertainty among wireless subscribers will provide an opportunity for
Nextel as
well as its competitors to steal market share.

"I think as a result of consolidation there will be some opportunities
for some
of the other wireless players, ourselves included, to pick up some
business,"
Donahue said. "Typically what happens in a merger is that it takes two
years to
really sort it out and get your act together, and so I think it spells
opportunity for us and the rest of the carriers."

With Donahue recently signing on to run Nextel through at least 2006,
the
carrier appears set to tackle its challenges and continue to be an
influential
force in the wireless industry.

 http://rcrnews.com/cgi-bin/article.pl?articleId=45782&a=a&bt=donahue