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Technology Stocks : NEXTEL -- Ignore unavailable to you. Want to Upgrade?

To: Arnie Doolittle who wrote (3371)	12/1/1997 4:27:00 PM
From: daniel katcher	Respond to of 10227

good nxtl history from network computing magazine. Nextel: Better Off The Next Time By Bill Frezza If the wireless industry gave out awards for dogged tenacity, top honors would have to go to Nextel Communications. This Specialized Mobile Radio (SMR) operator cum digital mobile phone wanna-be has been on a rags-to-rags-to-riches journey that makes a fascinating study on how to resurrect a bold vision nearly destroyed by a horrendous initial iplementation. For most of its life, the SMR business was relegated to the push-to-talk dispatch ghetto by regulatory constraints and second-rate technology. In 1987, when the cellular industry began spitting out its first millionaires, it became clear that restructuring SMR along similar lines might produce equally impressive results. The founders of Nextel, known as Fleet Call back then, decided to take a whack at this. They persuaded the FCC to relax the rules preventing operators from assembling nationwide systems while promising a dramatic increase in capacity by going digital. To accomplish this, while preserving the unique characteristics of SMR, such as multicast group addressing, they brought in Motorola to design a new network from the ground up. Dubbed Motorola Integrated Radio System (MIRS), this all-singing, all-dancing integrated voice and data system tried to do too much, too soon. in the process, it did the one thing the wider market would not forgive. It sacrificed voice quality. In the words of one wag, the low bit-rate vocoder made even little girls sound like "Darth Vader eating a cheeseburger." While this might have been acceptable to taxi drivers as an improvement over scratchy analog systems, it bombed with the cellular users Nextel was trying to attract. It bombed so badly, in fact, that a pending investment by MCI was scotched, sending Nextel's stock tumbling along with its hopes of raising the megabucks required to build out a nationwide network. Calling All Billionaires It was during Nextel's darkest hour that cellular entrepreneur Craig McCaw, fresh off his sale of McCaw Cellular to AT&T, came to the rescue. Not only did McCaw have the financial resources to save the company, he had the clout to attract a world-class management team while deftly handling a problem vendor. And that he did, insisting on a redesign of the troubled Motorola system that brought it more in line with the widely accepted Global Systems for Mobile Communications (GSM) digital cellular standard. Skeptics-including yours truly-doubted this phoenix would rise from the ashes. But to the credit of all concerned, Nextel appears to have not only resolved its technical problems but stole a march on the sexier PCS providers. The new Integrated Dispatch Enhanced Network (iDEN) technology from Motorola works like a charm, providing both circuit- and packet-switched voice capability, supporting instant connections and real-time conferencing among mobile work groups. The voice quality holds its own, and innovative marketing schemes, such as the elimination of roaming charges and per-second billing, have made it a hit with consumers. In fact, with 700,000 digital users, Nextel now has more digital customers than any PCS operator in the United States. Given its substantial license footprint, with access to over 350 markets, Nextel is finally positioned to achieve what its original founders wanted most of all-respect. That's not to say there aren't challenges ahead. Nextel is about to enter the mobile data market-a black hole that has consumed countless fortunes. Learning from its predecessors, its data solution will be based on a simple serial port connection into the phone and a standard protocol using Mobile IP, minimizing the number of "special" things data users need to do. System capacity may become an issue given the compromises made to improve quality, but all things considered, having more customers than you can handle is a happy problem. So, what's the moral of our story? If you believe in your vision-never say die. And if you're in the wireless business-never bet against Craig McCaw. Bill Frezza is a general partner at Adams Capital Management. The opinions expressed here are his own. He can be reached at frezza@alum.MIT.EDU or techweb.cmp.com/nc/frezza/frezza.html.