Tuesday, August 2, 2005

FCC Approves Sprint/Nextel Merger

The FCC voted to approve the merger between Sprint and Nextel. This completes all required regulatory approvals for the merger, and the companies expect to close the merger shortly.

The FCC action enables the transfer of control of all licenses and authorizations held directly and indirectly by Nextel to Sprint. These licenses and authorizations include: Specialized Mobile Radio (SMR) licenses in the 800 and 900 MHz bands, licenses in the 1.9 GHz band that resulted from the 800 MHz rebanding proceeding, Broadband Radio Service (BRS) licenses in the 2.1 and 2.5 GHz bands, and leases of Educational Broadband Service (EBS) spectrum in the 2.5 GHz band.

The FCC noted that while the number of large nationwide mobile carriers will be reduced from five to four as a result of the transaction, the FCC determined that carrier conduct will remain sufficiently competitive to ensure that market performance will not be impaired, and, given the expected benefits, the public interest will be enhanced on balance.

With regard to the effect of the merged entity's accumulation of BRS/EBS spectrum in the 2.5 GHz band, the FCC concludes that, because this spectrum is in an early state of transition to a new band plan and new uses by licensees, neither public interest harms nor benefits are likely to result in the near term from the merger.

As a condition to its approval to the merger, the FCC is requiring that Sprint Nextel fulfill its voluntary commitment to meet certain milestones for offering service in 2.5 GHz band, unless circumstances beyond its control prevent the merged entity from reaching those milestones. In addition to other specific implementation requirements agreed to by Sprint Nextel, the first milestone requires Sprint Nextel to offer service using BRS/EBS spectrum to at least 15 million Americans within four years of the effective date of the order consenting to the merger, and the second milestone requires the company to serve an additional 15 million Americans within six years.

Sprint is currently the third largest provider of commercial mobile telephone service based on subscribership, while Nextel is the fifth largest.

  • In December 2004, Sprint and Nextel Communications confirmed their plans to merge into a larger wireless and integrated communications service provider. The two companies currently serve more than 35 million wireless subscribers and 5 million additional subscribers through affiliates and partners. The new company would look to leverage a strong spectrum position to deliver nationwide mobile data and push-to-talk services. The company is also aiming to deliver new broadband wireless services for consumers.

  • Significantly, Nextel operates a nationwide network based on Motorola's Integrated Digital Enhanced Network (iDEN) technology, combines a digital wireless phone, two-way radio with "push-to-talk" feature, alphanumeric pager and "always connected" internet microbrowswer capabilities. iDEN leverages TDM, which uses Global Positioning Satellites (GPS) to reference a synchronized time, and then divides the channel into time slots.

    Nextel had been planning to deploy Motorola's WiDEN technology in its nationwide digital iDEN voice and packet data network. Motorola's WiDEN higher speed data technology is designed to quadruple data speeds. Nextel has also been testing a wireless broadband service in the Raleigh-Durham, N.C. market using Flarion Technologies' FLASH-OFDM technology. The combined company would continue to invest in its iDEN network until all voice traffic can be supported on the CDMA network. Nextel's push-to-talk (PTT) service would continue to run on the iDEN network until PTT could be supported on CDMA EVDO (Rev A) in about 2008.

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