WASHINGTON-U.S. District Judge Thomas F. Hogan last week rejected the Justice Department’s
motion to deny Nextel Communications Inc.’s lawsuit to vacate a 1995 antitrust consent decree, opening the way for a
full-blown evidentiary hearing this spring and keeping alive Nextel’s $150 million conditional purchase of nearly 200
900 MHz dispatch radio licenses from now-defunct Geotek Communication Inc.
“We’re pleased, and we’re
encouraged by Judge Hogan’s decision,” said Ben Banta, Nextel’s spokesman.
Hogan’s ruling lets Nextel more
fully develop its argument that because circumstances have changed dramatically since the decree was entered, it
should be repealed. Following extensive discovery in coming weeks and months, a hearing is expected to be held in
May.
Meanwhile, applications to transfer Geotek’s licenses to Nextel have been filed with the Federal
Communications Commission. Wireless Bureau Chief Thomas Sugrue, responding to a reporter’s question Friday on an
unrelated Nextel matter pending before the FCC, commented that Nextel “has brought a lot to the service
side” and “I am glad they are in those markets.”
Nextel contends, among other things, the dispatch
market no longer needs protecting because new dispatch spectrum is available and it needs 900 MHz access to compete
in the broader mobile telephony market.
Had Hogan sided with Justice, the Nextel-Geotek deal would have largely
collapsed since most of specialized mobile radio licensees in the transaction are covered by the 1995 decree. The
antitrust settlement bans Nextel and Motorola Inc. from holding 900 MHz SMR licenses in 14 major markets.
Even
under the new scenario, the Nextel-Geotek case could go south if the case moves too slowly.
Under the asset
purchase agreement approved by a Delaware bankruptcy court Feb. 16, Geotek’s licenses will revert back to its trustees
if decree approval is not secured within 120 days of that date, or about mid-June.
Justice’s push for summary
judgment against Nextel was supported by Mobex Communications Inc., Industrial Communications & Electronics Inc,
X.W. Corp. and other SMRs.
McLean, Va.-based Nextel, which controls more than half of the 3.1 million dispatch
subscribers, dominates the 800 MHz band and some SMRs fear that market position will become even more
threatening to dispatch competition if it is allowed to acquire Geotek’s 191 900 MHz licenses.
Largely because of
that market position, Nextel remains a favorite on Wall Street.
On cellular-like networks across the country, Nextel
markets dispatch, data massaging and mobile telephony on small handsets to corporate users.
“Mobex
Communications will do everything to fight for the preservation of competition within the specialized mobile radio
industry,” said Frank Casazza, president and chief executive officer of Mobex Communications Inc.
Mobex,
Lafayette, Calif., the No. 3 SMR with 50,000 subscribers, lost to Nextel in the fight for Geotek’s channels even after
upping its offer to slightly more than $150 million at last month’s bankruptcy hearing.
Before being edged out by
Nextel in bulk bidding for Geotek’s SMR licenses last December, Mobex, Industrial Communications, Southern Co.,
Chadmoore Wireless Group and others bid $54 million total for individual licenses.
“We fully respect Judge
Hogan’s decision to look further into the matter of monopolistic practices by Nextel and encourage other SMR
providers to do the same,” Casazza added. “But in the end, we believe the investigation will confirm the
importance of competition.”
Mobex recently asked Justice to investigate whether Nextel violated the ’95
decree. In addition to challenging the decree’s repeal, Mobex and other SMRs are contesting-on antitrust grounds-
Nextel’s purchase of 900 MHz Geotek licenses not covered by the antitrust decree.
“If this transaction is
permitted to occur, the result may not be immediate, but it will be certain: No dispatch business will be able to
build a rational business plan for competition once the majority of 900 MHz licenses are owned or controlled by
Nextel,” said John Reardon, a Washington, D.C.-based attorney for Mobex and director of the Alliance for Radio
Competition, in a March 12 letter to Claude Scott of Justice’s antitrust division.
ARC has retained Donald Baker, a
prominent antitrust attorney and husband of former FCC wireless regulator Beverly Baker, to help make the antitrust
case against Nextel.
Reardon, also in the letter to Scott, complained Nextel does not offer service on 900 MHz SMR
channels it bought from the FCC three years ago. “Instead it stores them in its spectrum warehouse so that others
may not compete against it,’ Reardon stated.
Reardon said 30 SMRs have joined the coalition.
Washington
reporter Heather Forsgren Weaver contributed to this report.
