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

lrmobile_wifiguy 12/5/2012 | 1:03:54 AM
re: Nextel Eyes $1B Network Saving I like flarion and the technology, but it would be cool to see them go EV-DO and start standardizing on one of the technologies. This way Verizon would have some competition and both companies would be incintivized to build out faster.
biotch78 12/5/2012 | 1:03:28 AM
re: Nextel Eyes $1B Network Saving i'd rather have nxtl rollout flarion. verizon and sprint are already rolling out ev-do...woohoo, a 3rd carrier with ev-do if nextel commits to that! the only way for nextel to differentiate from the "me-toos" would be committing to flarion.
markbsigler 12/5/2012 | 1:02:06 AM
re: Nextel Eyes $1B Network Saving Ever consider that going to a CDMA EV-DO network would position Nextel for M&A with Sprint? ...or [less likely] with Verizon?

Nextel and Sprint would make a potent competitor to T-Mobile, Verizon and Cingular. Consolidation is inevitable. Nextel needs to position itself to mate with one of the top 3.
El Rupester 12/5/2012 | 1:01:50 AM
re: Nextel Eyes $1B Network Saving If you are Nextel, one of the thinmgs you would have to wonder is "we have done nicely with a single-source, proprietary solution (iDEN) until now, but do we want to do that again?".

Would you want to pay premium prices for equipment (no competition), be locked in to one supplier, and risk a slower pace of innovation (can one supplier matrch the R&D of the entire EVDO eco-system? I think not...)

On the other hand, going with EVDO does risk losing differentiation and outting them in a game of me-too catch-up with Sprint & Verizon. But surely it is easier to differentiate & spend money where it will count if you can leverage a broader base, and you have competitive pressure among OEMs to help.

If I were them, I think I'd have looked hard at WCDMA and HSDPA - even better leverage, bigger eco-system, higher performance, more competition and lower prices.

Also, I wonder what Craig McCaw's view is... as a shareholder but backing WiMAX for Clearwire ??
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