Nextel Mulls Wireless Broadband

Nextel Communications Inc. (Nasdaq: NXTL) used this week’s second-quarter results announcement to talk up future plans to launch a wireless broadband network in the 2.5GHz spectrum band, touting a number of potential vendors for its long-term technology of choice (see Nextel Reports Q2).

The carrier currently runs a proprietary cellular iDEN network developed by Motorola Inc. (NYSE: MOT). However, Nextel will eventually migrate its customer base to Sprint Corp.'s (NYSE: FON) CDMA 1x EV-DO network, following the $35 billion megamerger announced last December and expected for completion next month (see Deal Solves Nextel 3G Dilemma). Any wireless broadband services would likely operate alongside the firm's cellular networks.

The combined Sprint/Nextel entity will serve approximately 43 million subscribers, ranking it the third largest U.S. carrier behind Cingular Wireless LLC’s 51.6 million customer base and Verizon Wireless's 45.5 million.

The merged company will also have a near-nationwide footprint of lucrative 2.5GHz spectrum (the spectrum formerly known as MMDS), which could support a variety of wireless broadband services.

“We expect that we will build a network at some point on 2.5,” said Nextel CEO Tim Donahue on an analyst conference call. “We have no intent of selling it. It’s fantastically valuable spectrum.”

Nextel has already tested kit from Flarion Technologies, and recently announced a trial with IPWireless Inc. for deployment of UMTS-TDD equipment in the Washington D.C. area (see Nextel Flashes With Flarion and Nextel Trials IPWireless). Meanwhile, Sprint has announced plans to test WiMax products from Motorola in an effort to determine the potential of the much hyped 802.16 standard (see Sprint Picks Moto for WiMax and Sprint Firms Up WiMax Plans).

It’s unlikely both companies will stop there. “There are some interesting fixed technologies out there that may be able to move into the world of mobility, like NextNet and others, so we are keeping an eye on that,” reveals Donahue.

“We are very interested in finding the technology that will take us into the future... We are just now going through a very disciplined approach in terms of what are the technologies that are out there and what makes the most sense for our customers -- and obviously from a technical perspective.”

Of course, Donahue has long been an advocate of emerging broadband wireless technology and frequently touts the cost and technical benefits of such networks (see Nextel Eyes $1B Network Saving).

For the second quarter of 2005, the operator posted revenues of $3.82 billion compared to $3.3 billion the year before. But second-quarter earnings fell due to merger-related costs and a large tax credit the year before. Net income was $524 million, or $0.46. In the same quarter a year before, the company earned $1.3 billion, or $1.16 a share, including a tax benefit of $0.69.

— Justin Springham, Senior Editor, Europe, Unstrung