Subject: [NEXTEL-1] Nextel 3G opportunities open wide at 1.9 GHz

From: [email-masked]
Date: Mon, 19 Jul 2004 15:45:53 -0400

Nextel 3G opportunities open wide at 1.9 GHz

by DAN MEYER
July 19, 2004

If Nextel Communications Inc. takes spectrum at 1.9 GHz as part of the
plan to solve interference at 800 MHz, the carrier finally might be able
to extricate itself from the fringe of industry that its disparate
spectrum holdings and iDEN network technology has placed it in today.

It may be months before the Federal Communications Commission releases
details of the controversial plan in which Nextel would pay nearly $5
billion and give up spectrum at 700 MHz, 800 MHz and 900 MHz in exchange
for 10 megahertz of clean spectrum in bands similar to where some of its
competitors operate.

"Nextel was in a very defensive position regarding its plans to bolster
its network and roll out a 3G network technology," noted industry
analyst firm Current Analysis in a research note. "However, now that
Nextel has gained a huge swath of valuable spectrum in the 1900 MHz
range, it can finally act on a network decision to become competitive in
the long run."

Nextel's plans could include any number of technologies, including
Flarion's Flash-OFDM solution that the carrier is testing in North
Carolina; a CDMA-based solution similar to what Verizon Wireless and
Sprint PCS have announced plans to deploy; a Wideband-CDMA based service
that could include the higher-speed HSDPA derivative similar to what
Cingular Wireless L.L.C. wants to deploy; or any number of 802.xx-based
standards making the news.

The leading candidate appears to be Flarion's Flash-OFDM solution that
Nextel Chief Executive Officer Tim Donahue recently said was performing
better than expected in trials. The carrier initially provided the
service to "friendly" partners, but recently opened the trial to a much
larger customer base in an attempt to test its scalability.

Independent testing of the Flash-OFDM service showed throughput speeds
of nearly 1 megabit per second, which was more than twice the speed
produced by EV-DO networks, as well as a drastic reduction in network
latency.

Roger Entner, program manager of wireless and mobile services for the
Yankee Group, expressed some concern over a possible nationwide
Flash-OFDM deployment as the decision could put Nextel back into its
current position of having to rely on a single infrastructure provider.
Nextel uses only Motorola Inc. for its iDEN-based network.

"They are in that situation already with Motorola and I don't think they
want to keep themselves obligated to one provider," Entner explained.

A safer bet for Nextel could be a CDMA-based deployment using either 1x
EV-DO available today or possibly waiting for its higher-speed EV-DV
edition expected to be ready by early 2006. Nextel has had a close
working relationship with CDMA developer Qualcomm Inc. in the past and
was reportedly close to announcing a CDMA overlay for its iDEN network
several years ago.

Deutsche Bank noted earlier this year that it believed Nextel was
testing a GSM 1x/EV-DO solution provided by Lucent Technologies Inc. and
Samsung Corp., but doubted the carrier would move ahead with the
solution since it did not provide a competitive advantage to Verizon
Wireless' or Sprint PCS' EV-DO deployments. Nextel's Donahue told RCR
Wireless News earlier this year that whatever Nextel selected for its
next-generation network, it would leapfrog what was currently available.

Further broadening Nextel's next-generation possibilities is its
substantial MMDS spectrum holdings in the 2.5 GHz bands, which the
carrier hinted it could use to launch a Flash-OFDM network for major
markets. Nextel holds about two-thirds of the MMDS spectrum nationwide
and has hinted that it could deploy multiple technologies using both its
1.9 GHz and 2.5 GHz spectrum that could distance the carrier from its
competitors.

While Nextel may have access to the spectrum necessary to launch a
next-generation network, analysts cautioned that the financial burden of
such a launch should not be overlooked.

"It's not just the $5 billion for the 1.9 spectrum that Nextel has to
worry about," Entner said. "They will have to somehow provide new
handsets to what will be nearly 15 million customers by the time the
network is deployed that could cost another $5 billion and still have to
fund the build out of a nationwide network using the 1.9 spectrum."

SG Cowen industry analyst Tom Watts projected capital expenditures to
fund a nationwide deployment regardless of technology chosen would cost
between $5 and $10 per potential customer covered, which would translate
to between $1.2 billion and $2.4 billion based on Nextel's current
coverage.

Regardless of its technology choice, analysts note Nextel should move as
quickly as possible in deploying a next-generation network as most of
its competitors are moving aggressively in their deployments. Verizon
Wireless and Sprint PCS have already announced plans to have EV-DO
services launched across most of their networks by the end of 2005,
while Cingular said it hopes to begin deploying W-CDMA and its
higher-speed HSDPA derivative by the end of next year or in early 2006. 

"If Nextel does not act quickly, much of its competition could have at
least a one to two-year lead in the deployment of next-generation
networks," Current Analysis added.

 http://rcrnews.com/cgi-bin/article.pl?articleId=46309

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