Subject: [NEXTEL-1] Walkie-talkies stage comeback

From: Marcel <[email-masked]>
Date: Wed, 06 Nov 2002 15:19:38 -0500

http://cnniw.yellowbrix.com/pages/cnniw/Story.nsp?story_id=34137559&ID=cnniw&scategory=Business+and+Finance&

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Walkie-talkies stage comeback

Source: The Press - Christchurch

Publication date: 2002-11-05

Top United States mobile phone companies are spoiling for a fight
to win customers in the market for walkie-talkie services, but
analysts say the upstarts face an uphill battle against leader
Nextel Communications

Nextel, the No 5 US mobile company, has managed to post strong
results despite fierce competition and a year-long slump in mobile
subscriber growth thanks to the huge popularity of its Direct
Connect radio service that allows its users to communicate instantly
with the push of a button.

Verizon Wireless, Alltel and Sprint want to imitate this success
by developing radio services they call push-to-talk.

"I think it poses a small threat to Nextel's existing customer
base," said Mr Lee, a J. P. Morgan analyst. "Right now I'm hearing
that the products (Nextel's rivals) are making fall short of
Nextel's."

Verizon, the No 1 US mobile phone company, said last week it
would offer push- to-talk in the middle of next year. Alltel, a US
rural operator, also said last week it was planning a 2003 trial.

Sprint , the No 4 US operator, says its network is ready to
support push-to-talk but has not said when it would launch its
service.

Verizon spokesperson Andrea Linsky said setting up push-to-talk
calls on Verizon's network would take longer than Nextel's
equivalent.

"We feel we'll be able to match or better the Nextel product
based on our coverage," Verizon's Linsky said.

Nextel is preparing for the coverage battle with a promise to
launch its service nationwide next year. Mr Lee said Verizon and
Sprint would try to make up for technical issues with lower prices
or free radio services.

"If you're a truck driver, you'll want the thing to be reliable,
so you're likely to stick to Nextel regardless of price ... but the
future market growth for Nextel will be severely limited," Mr Lee
said. "It will have to either cut its prices or stop growing."

Another analyst said that unless Nextel allows its customers to
radio with rivals' clients, its own users would not desert it until
all of their colleagues change their service.

"It's hard to believe that Nextel would open its customer base to
other providers," Bear Stearns' Todd Rethemeier said.

Nextel said it would be careful about linking to other companies'
networks for quality reasons.

"We're going to continue to control the quality of our calls. The
way we do this today is keeping (Direct Connect) on our own
network," Nextel's chief marketing officer Tom Kelly said, noting
that he has not seen a competitive product so far.

"In order for it to affect us it would have to be a product that
could compete with ours," Mr Kelly added. Aside from technical
issues, Mr Rethemeier said the push-to- talk challengers must also
make business decisions.

"Even if Nextel's rivals do overcome the technical issues there
are business problems. Nextel has spent several years building up an
expensive distribution channel," he said.

This allows Nextel to reach the small and medium sized businesses
that its bigger rivals might not reach, he said.

Verizon's Ms Linsky argued that Verizon has sales teams that can
address all markets.

About 75 per cent of Direct Connect customers are medium and
large companies, Nextel's Kelly said.

--------------------

Publication date: 2002-11-05

© 2002, YellowBrix, Inc.

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