Deal Solves Nextel 3G Dilemma

$35B merger with Sprint sees Nextel migrate to EV-DO technology at expense of Flarion’s Flash-OFDM

December 15, 2004

2 Min Read
Deal Solves Nextel 3G Dilemma

Today’s $35 billion mega U.S. carrier merger deal ends months of speculation surrounding Nextel Communications Inc.'s (Nasdaq: NXTL) choice of technology for its national wireless broadband network, with the carrier set to move its 15.3 million subscribers to Sprint Corp.'s (NYSE: FON) future CDMA 1x EV-DO network (see Sprint, Nextel Confirm Merger).

As previously reported by Unstrung, Nextel was mulling over two standards as its long-term technology of choice: Flarion Technologies’ proprietary Flash Orthogonal Frequency Division Multiplexing (OFDM) and industry standard CDMA 1x EV-DO (see Nextel Studies Standards and Nextel Eyes $1B Network Saving).

Nextel currently runs a proprietary network technology developed by Motorola Inc. (NYSE: MOT) called iDEN. The combined “Sprint-Nextel” business will, however, see Nextel migrate its customer base to Sprint’s EV-DO network (see Sprint Confirms EV-DO Network).

Sprint CEO Gary Forsee outlined the merged company’s network plans in a conference call this morning. “In 2005 our current individual plans for CDMA and iDEN rollout will remain largely unchanged. This includes Sprint’s deployment in 2004 and 2005 of EV-DO. We will also finalize our product direction for interoperability of push-to-talk services between the two networks. Finally, we will implement a site-sharing agreement in 2005 to allow Sprint-Nextel to benefit from collocation opportunities across our cell sites.

“In 2006 those collocation efforts will continue but we will also start to begin to consolidate our network organizations. We will take our first steps in 2006 to start to plan the iDEN transition to CDMA... During the early offerings we will deploy push-to-talk services operating seamlessly across iDEN and CDMA networks.

“In 2007 we will focus on developing voice-over-IP and push-to-talk capabilities with the next-generation EV-DO Release A [standard]. Finally, in 2008 we will launch push-to-talk over that EV-DO Release A which will allow us to begin a transition of iDEN into EV-DO.”

Today’s deal will play into the hands of network suppliers Lucent Technologies Inc. (NYSE: LU) and Nortel Networks Ltd. (NYSE/Toronto: NT), who were last week confirmed as primary suppliers to Sprint’s EV-DO network (see Sprint Invests in EV-DO).

Nextel’s iDEN supplier Motorola will likely find solace in the fact it too is involved in Sprint’s future network plans.

The merger also appears to have put an end to Flarion’s hopes of an imminent major commercial deal, although a Nextel spokesman was keen to stress there are no plans to conclude the trial in Raleigh, N.C. (See Nextel Steps Up Data Race.)

Flarion was unavailable for comment at press time.

— Justin Springham, Senior Editor, Europe, Unstrung

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