Subject: [NEXTEL-1] Goldman Speaks - Everyone Listens

From: [email-masked]
Date: Wed, 19 Nov 2003 09:47:31 -0500

PCS: Ready Link PTT Enhances Service

Offering; Incremental Neg for NXTL; Reit

U/C

Yesterday PCS launched its 'Ready Link' PTT service. After our trials of the
service we

highlight 4 key takeaways: (1) PTT is an add-on service that enhances PCS's
offering and

should help boost PCS's competitiveness in the SME, youth and family plan
markets; (2)

We expect Ready Link pricing to fall, as has occurred with other wireless
vertical

services, though positive ROCE is still likely given the minimal incremental
investment

needed to enable CDMA PTT; (3) Ready Link helps PCS position itself in advance
of

WLNP. It enhances PCS's offering, in general, and may help PCS capture certain

enterprise churners from NXTL; (4) Ready Link plus other PTT competitors will
limit

growth at NXTL. While not perfect comps for NXTL's service, we expect the PCS,
VZW

and other services to be attractive to users unfamiliar with NXTL PTT or to
certain 'fringe'

NXTL users that rely less heavily on PTT and so would be willing to trade-off
initial

setup time for a lower price, non-MOT handsets or data features. We reiterate
our U/C

ratings on PCS and NXTL.

READY LINK LIKELY TO AID PCS APPEAL IN CERTAIN MARKETS. We do not

expect PTT functionality to gain mass market appeal. But it should get traction
as an

add-on feature among certain user groups, especially in the youth and family
plan

markets, which have been large growth areas. That makes Ready Link an
incremental

improvement to the current PCS service. Over time, as PCS integrates PTT
functionality

into most of its handsets, the service will simply raise the general
functionality of wireless

by offering users another option for communicating. In that way we see PTT as
similar to SMS,

though expect SMS to have broader appeal.

READY LINK HELPS POSITION PCS FOR WLNP. We see this occurring in two ways.
First,

because the PTT service will appeal to some users, it increases the
competitiveness of PCS's

offering vis-a-vis carriers that do not offer a PTT service. Second, it better
positions PCS to attract

customers from NXTL who might prefer PCS data services or handset selection to
that at NXTL.

Though we see the impact of Ready Link as incremental at this point and are
making no changes to

our estimates.

SEE NXTL UNDER INCREASING COMPETITIVE PRESSURE AS MORE PTT OFFERINGS

EMERGE. We do not see the PCS PTT service as a perfect comp for the NXTL
service. Nor do we

believe PCS intended it to be. We see the service being attractive to potential
PTT users that are

unfamiliar with the NXTL service and to certain NXTL 'fringe' users who are not
heavy users of

PTT and so may be willing to sacrifice call setup latency for a better price,
different handsets or

better data features, for example. The pressure on NXTL will increase with each
subsequent PTT

competitor launch (we expect offers from AWE, Cingular and possibly T-Mobile in
04) as the

choice of handsets, brands and features in the market expands. We believe this
will have three

effects on NXTL: (1) It will create a lot more noise in what we see as the
growing, but ultimately

still niche market for PTT service, making it more costly for NXTL to compete;
(2) It will limit

NXTL's growth in the consumer and certain enterprise markets; (3) It will
pressure NXTL to

improve its offering in ways that are important to users outside its traditional
government and

enterprise niche, the most notable being wireless data services. That may
explain what we sense has

been a stepped-up emphasis by management on broadband wireless data and network
upgrades to

wideband iDEN (WiDEN), Flarion or CDMA. We should emphasize that we continue to
regard

NXTL's performance as 'best in class' on many metrics. But as its monopoly in
PTT erodes, we feel

what constitutes best in class performance will change and we expect NXTL's
ARPUs and margins

over time to come down towards industry average levels.

I, Frank Governali, CFA, hereby certify that all of the views expressed inthis
report accurately

reflect my personal views about the subject company orcompanies and its or their
securities. I also

certify that no part of mycompensation was, is, or will be, directly or
indirectly, related to the

specific recommendations or views expressed in this report.

------------------------ Yahoo! Groups Sponsor ---------------------~-->
Buy Ink Cartridges or Refill Kits for your HP, Epson, Canon or Lexmark
Printer at MyInks.com. Free s/h on orders $50 or more to the US & Canada.
http://www.c1tracking.com/l.asp?cid=5511
http://us.click.yahoo.com/mOAaAA/3exGAA/qnsNAA/61FxlB/TM
---------------------------------------------------------------------~->

Your use of Yahoo! Groups is subject to http://docs.yahoo.com/info/terms/