Nextel Eyes $1B Network Saving

'Enormous' vendor interest in national wireless broadband network could drive down costs

November 18, 2004

2 Min Read
Nextel Eyes $1B Network Saving

Nextel Communications Inc. (Nasdaq: NXTL) claims “enormous” interest in its RFP for the nationwide deployment of a wireless broadband network, demand that could cut the cost of the deal by up to $1 billion.

Last month Unstrung reported that the U.S. carrier is mulling over two standards as its long-term technology of choice: Flarion Technologies’ proprietary Flash-OFDM and industry standard CDMA 1x EV-DO (Evolution, Data Only). Nextel has issued an RFP for the nationwide deployment of both technologies, due for completion by the end of this month (see Nextel Studies Standards).

Speaking at a UBS AG conference in New York this week, Nextel president and CEO Tim Donahue was keen to talk up vendor interest in the project.

“From the vendor community perspective, this is a big deal… It’s probably the last time a vendor has an opportunity to build a nationwide network without having to worry about a lot of legacy issues, and so you can imagine there has been an enormous amount of interest and activity against the RFP which has now been sent out. My expectation is that we are going to get extraordinarily competitive pricing. We have been talking about costs of two to three billion dollars. It could be closer to two than three. We’ll see when it comes in.”

Donahue was also keen to stress that Nextel remains undecided on its choice of technology. “We are straight down the middle on this. We are going to see what the vendors come back with… We haven’t finalized any plans yet.”

The carrier has previously stated it expects to make a final decision in the first quarter of next year.

OFDM (Orthogonal Frequency Division Multiplexing) is a modulation scheme that has provided Nextel with an average downlink speed of approximately 900 kbit/s in recent trials (see Nextel Steps Up Data Race and Nextel Flashes With Flarion).

In contrast, EV-DO is an upgrade to CDMA 1x RTT networks, intended to crank up data rates to a theoretical 2 Mbit/s, although 300 to 500 kbit/s is a more realistic limit. EV-DO network suppliers likely to be banging on Nextel’s door include Ericsson AB (Nasdaq: ERICY), Lucent Technologies Inc. (NYSE: LU), Motorola Inc. (NYSE: MOT), and Nortel Networks Ltd. (NYSE/Toronto: NT).

Nextel’s rivals have already committed to the technology (see Sprint Confirms EV-DO Network and Verizon Repeats on 3G).

— Justin Springham, Senior Editor, Europe, Unstrung

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