WASHINGTON-Dispatch radio operators last week urged U.S. District Judge Thomas F. Hogan to reject a proposed antitrust settlement between the Justice Department and Nextel Communications Inc., arguing it would exacerbate Nextel’s dominance of the specialized mobile radio industry and reward it for possible violations of a 1995 consent decree.
“By agreeing to the proposed modification, which enables Nextel to greatly enhance its 900 MHz holdings, the department would effectively dissolve the 900 MHz `safe harbor,’ and stifle competition to the growing Nextel monopoly,” stated the Alliance for Radio Competition in comments filed with the court. ARC is a coalition of dispatch radio licensees.
The filings put Hogan in the precarious position of deciding whether to defer to government antitrust lawyers, who quietly struck a deal with Nextel in June after arguing for months against lifting the decree, or whether to give heed to small- and medium-sized dispatch radio operators that want the 1995 decree kept intact to preserve the competition left in the dispatch industry.
Some observers predict Hogan will side with Justice. Such a ruling likely would provoke a challenge in the federal appeals court here.
Nextel claims unforeseen regulatory, marketplace and technological changes justify lifting the decree. The Justice Department, which previously shot down that argument, now agrees with that reasoning insofar as modifying the decree.
As a business matter, Nextel appears desperate to acquire more spectrum to accommodate nationwide digital subscriber growth and to provide next-generation multimedia services.
The Federal Communications Commission recently gave Nextel limited relief by letting it acquire private wireless frequencies to relocate displaced licensees on spectrum Nextel bought.
In addition to the question of modifying the decree is the issue of whether Nextel has complied with the decree; and whether Justice has vigorously enforced it since 1995.
Mobex Communications Inc., a California SMR that lost out to Nextel for Geotek Communications Inc.’s 191 900 MHz licenses in a bankruptcy auction last year, said the court should not only nix the DOJ-Nextel deal but also hold Nextel in contempt for failing to divest 900 MHz licenses and acquiring licensees in violation of the 1995 decree.
“Nextel has unclean hands; it has worked to undermine the consent decree,” said Mobex.
Nextel paid $150 million for SMR permits held by Geotek, which was positioned to compete against Nextel nationally before succumbing to bankruptcy.
The 1995 decree, triggered by Nextel’s purchase of Motorola Inc. SMR assets in the mid-1990s, bans Nextel from owning or operating 900 MHz dispatch systems in 14 major markets.
Nextel controls nearly 70 percent of all dispatch customers, most of whom are served on 800 MHz systems. Nextel offers a mix of dispatch, messaging and mobile telephony. A typical Nextel monthly bill runs around $70.
Smaller SMRs point out their customers only need dispatch service and can afford to pay bills closer to $20 a month.
The proposed decree modification, prompted by Nextel’s lawsuit in February to vacate the decree, prevents Nextel from buying most of Geotek’s SMR licenses for now.
At the same time, it would let Nextel acquire non-Geotek SMR channels immediately and sunsets the decree on Oct. 30, 2000-five years sooner than under the 1995 decree.
SMR operators claim the DOJ-Nextel agreement is littered with loopholes, rendering it meaningless. “Shortening the term of the consent decree to just over a year plays into Nextel’s hands because Geotek’s creditors will simply warehouse the licenses until the consent decree expires, and then try to sell to Nextel again,” stated Chadmoore Wireless Group, a Las Vegas SMR.
Dispatch radio firms argued the SMR market is more concentrated today than it was when Hogan signed the 1995 decree. They downplay arguments about new spectrum opportunities in other bands for SMRs and the prospect of dispatch competition from mobile phone providers.
“Any relaxation of the terms of this agreement between the United States and Nextel would be premature because effective competitive to Nextel in the market for trunked dispatch services has not yet had an opportunity to materialize,” said Radio Communications Systems Inc., a small Kentucky SMR.
