Nextel's Nationwide Walkie-Talkie

Nextel Communications Inc. (Nasdaq: NXTL) has updated its much lauded push-to-talk digital walkie-talkie function so that subscribers can use it outside of their home market. The operator is planning to offer the service nationwide sometime in the third quarter (see Nextel PTT is Going Nationwide)

The Nextel "Direct Connect" service is a "push-to-talk" (PTT) technology that allows users to push a button on their phone and to chat with another person or group on the Nextel iDEN network. The service is seen as a major contributor to the $70-plus monthly average revenue per user (ARPU) that Nextel enjoys from its business-oriented subscriber base. In Nextel's PTT system, a conversation is packetized and routed through the Digital Application Processor (DAP) on the phone and via the Home Location Register (HLR) on the network, not via IP.

"150 million Direct Connect calls are made daily," says Kelly Mullins, Nextel's director of public relations. "94 percent of our customers use it."

The Direct Connect system currently has a range of around 300 miles, according to Mullins -- so a customer from Washington D.C. could travel as far as Baltimore or Maryland and still connect with users on the home network.

With the first stage of its nationwide rollout underway, Mullins says that for the first time, Nextel customers will now be able to use the Direct Connect feature outside of their home markets. For instance, two colleagues from Washington on a business trip to New York City will be able to talk to each other using the system, as well as other Nextel subscribers in NYC. However, what they won't be able to do – yet – is Direct Connect to subscribers back in Washington.

That feature will be available sometime in the third quarter of this year, according to Mullins, after Nextel has provisioned all of its markets. Phase one is available now in New York, New Jersey, Connecticut, Southern California, Southern Nevada, Maryland, Virginia, the District of Columbia, Florida, Maine, New Hampshire, Massachusetts, Rhode Island, Vermont, Delaware, and Pennsylvania.

Analysts see push-to-talk as one of the key features that make the Nextel service attractive to high-spending business customers, so naturally rival carriers are trying to develop their own versions of the service (see Walking, Not Running, to PTT and Winphoria Talks Back). "No one else looks like they're even close," says Mullins.

Indeed, most of the analysts that Unstrung has spoken to do not expect to see rivals roll anything out before the end of this year. Call setup times and network latency and capacity issues are all potential hang-ups for operators looking at IP-based PTT systems for their networks.

The "call setup time" refers to how long it initially takes to connect to a network. Mullins says that the iDEN-based Nextel system has a call setup time of less than one second. By contrast, CDMA networks have a wake-up period of around four seconds: The handset has to request a session and be assigned a resource in the network before packet transmission can begin.

Even when other carriers have installed PTT on their networks, Mullins still thinks Nextel has one big advantage. "Look at Sprint PCS [NYSE: PCS]," she scoffs: "They don't have any phones with the [PTT] button on them. What are they going to do, ask all their customers to go out and buy new phones?" — Dan Jones, Senior Editor, Unstrung
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