WASHINGTON-Nextel Communications Inc. lawyer Thomas Cullen, attempting to convince U.S.
District Judge Thomas F. Hogan last Friday to accept the dispatch giant’s request to vacate a 1995 antitrust consent
decree, argued 900 MHz is not the best spectrum for specialized mobile radio entry but is one of the best bands for
cellular expansion.
Hogan said he would decide shortly whether to dismiss Nextel’s lawsuit based on written briefs,
as the Justice Department and several SMRs advocate, or whether to hold a more involved, evidentiary
hearing.
“The balance is gone,” said Cullen, referring to regulatory, technological and marketplace
changes that he argued make the decree inapplicable to Nextel anymore.
The decree prohibits Nextel, the nation’s
top dispatch operator with more than half of the nation’s 4.6 million SMR subscribers, and Motorola Inc. from holding
900 MHz SMR licenses in 14 major U.S. markets. Nextel needs the decree relaxed to keep most of the 191 licenses it
purchased for $150 million from Geotek Communications Inc. in a bankruptcy auction last month.
Nextel’s lawsuit,
which argued that dramatically changed circumstances necessitated the decree’s repeal, drew stiff opposition from
Justice and other SMRs in written briefs.
Claude Scott, a Justice Department attorney, told the court Nextel greatly
benefited from the decree as made evident by its acquisition of major 800 MHz SMR competitors and its large
purchase of 800 MHz SMR licenses in recent years.
In urging for summary judgment against Nextel, Scott said,
“As long as we’re litigating the issues … those [Geotek] licenses cannot be used by anybody. Competition will not
develop.”
Cullen’s argument that 900 MHz is not the best spectrum for SMR goes against conventional
wisdom that allows SMR service at 900 MHz.
The Delaware bankruptcy court’s auction of Geotek’s licenses drew
bids from a host of mainstream dispatch operators, including Mobex Communications Inc., Chadmoore Wireless
Group, Industrial Communications & Electronics Inc., Southern Co. and FleetTalk Partners.
“Despite Nextel’s
arguments to the contrary, there are no comparable alternatives for the expansion of existing 900 MHz SMR trunked
dispatch systems,” stated X.W. Corp., a two-way radio dealer in Denver that operates a 900 MHz trunked
dispatch system.
Cullen’s argument-that unforeseen developments since 1995 make the decree no longer relevant or
effective-appear to be designed to recast the relevant market at issue in the case. Justice argues the relevant market is
dispatch; Nextel believes the market has become simply wireless.
“The law does not permit litigants to walk
away from judicially approved agreements in this manner,” said the Justice Department in its Feb. 26 filing.
“Rather, it imposes a heavy burden on defendants who seek termination of a decree over the objection of the
United States. Nextel must prove that circumstances have changed in ways that were not anticipated, and that the
remedy it seeks is consistent with the procompetitive purpose of the decree. Nextel’s motion fails to meet this standard
in three respects, each of which independently requires denial of the motion.
“First, instead of proving that
relevant circumstances have changed, Nextel merely offers predictions that those circumstances will change at some
time in the future. Second, while Nextel asserts that it did not anticipate these ‘changes,’ the record demonstrates
unequivocally that Nextel made the same predictions before the decree was entered, and that those predictions were a
principal focus of the parties’ decree negotiations. Third, the remedy requested by Nextel would frustrate the purpose of
the decree. It would circumvent the mechanism that the parties agreed upon to deal with foreseeable changes in the
market, and it would preclude entry by firms that need to acquire spectrum to compete against Nextel.”
Under
the decree, the parties agreed not to seek decree relief earlier than July 25, 2000, (five years from the entry of the
decree) if unforeseen circumstances arose.
Mobex, a California-based SMR that failed to outmaneuver Nextel for
Geotek’s licenses even though it was willing to match the winning $150 million bulk bid, is leading an effort to keep
the decree intact and to prevent Nextel from acquiring $19 million of Geotek licenses not covered by the 1995 consent
decree.
Mobex also has asked the Justice Department to investigate whether Nextel violated the decree during the
past four years.
Joining Mobex and Justice in opposing Nextel’s effort to vacate the decree are Industrial, a Boston-
based SMR, and X.W. in Denver
In its filing, Industrial said, “It is at least surprising that Nextel has pursued
the development of a dual-band radio that operates on the prohibited spectrum and only in that
spectrum.”
Even if Hogan decides against dismissing the Nextel lawsuit right now, the McLean, Va.-based
SMR giant has another problem.
It is this: The asset purchase agreement with major Geotek creditors
Hughes Electronics Corp., Merrill Lynch and IBJ Whitehall Bank & Trust Co. has a termination clause affecting most
of the licenses that kicks in if the court either rules against Nextel or simply has not ruled by June.
