WASHINGTON-The Justice Department’s denial of Nextel Communications Inc.’s request to modify a 1994 antitrust consent decree kept the nation’s top dispatch radio operator from bidding on bankrupt Geotek Communications Inc.’s licenses last week, a potentially major setback that could stifle the highly leveraged wireless firm’s ability to accommodate future growth in major markets.
Nextel’s request was turned down by Justice just days before last Wednesday’s bankruptcy auction of Geotek’s approximately 190 900 MHz SMR licenses.
“We did not agree to modify or terminate that consent decree, so it is still in effect,” said Gina Talamona, a Justice spokeswoman.
Thus, Nextel could not participate in either individual-license bidding last Wednesday or bulk-license bidding on Thursday. However, McLean, Va.-based Nextel still could be in the running for Geotek’s licenses.
Sources said Nextel had a major presence at Geotek’s bankruptcy auction in Wilmington, Del. After Friday’s 10 a.m. bankruptcy court hearing on Geotek was postponed for at least two weeks, there was speculation Nextel may have made a bulk-license offer for Geotek’s SMR licenses-perhaps as much as $150 million-that far surpassed the reported $55 million in total individual license bids and bulk-license bids.
Bulk-license bids were said to have been offered by Chadmoore Wireless Group Inc., of Las Vegas; Mobex Communications Inc., of California; and possibly others.
If Nextel made such an offer, it likely would have had to have been contingent on Nextel getting the U.S. District Court for the District of Columbia to do what Justice was unwilling to do.
Individual-license high bids were said to have been made by Mobex, Industrial Communications & Electronics Inc., of Boston; Fleet Talk, of New Jersey; Southern Communications Inc., of Atlanta; BellSouth Corp.-RAM Mobile Data, of New Jersey; and some lesser known SMRs.
Nextel declined comment as did bankruptcy lawyers for Geotek debtors and Rothchild Inc., the New York financial adviser to Geotek and overseer of the bankruptcy auction.
Nextel, which controls half of the 3.1 million dispatch radio units in use, dominates the 800 MHz SMR business. For that reason, former Justice antitrust chief Anne Bingaman conditioned Nextel’s purchase of Motorola Inc.’s SMR properties four years ago on the divestiture of most 900 MHz channels in Boston, Chicago, Dallas, Houston, Denver, Los Angeles, San Francisco, Miami, Orlando, New York, Philadelphia, Washington, D.C., Detroit and Seattle.
Nextel, however, did acquire many 900 MHz SMR licenses in a 1996 auction held by the Federal Communications Commission.
Nextel’s iDEN nationwide network-designed by Motorola to offer customers a combination of digital dispatch, mobile phone and alphanumeric messaging-is said to be at or near full capacity in some major markets.
With the development of iDEN 900 MHz radio equipment, Nextel would be well-positioned to put Geotek channels into immediate use.
It is unknown whether complaints against Nextel for refusing to resell wireless service and heavy-handed marketing practices, combined with its SMR domination, were factors in Justice’s decision.
The FCC, whose rules require SMRs and other commercial wireless carriers to provide resale on a nondiscriminatory basis, has warned Nextel that continuation of high-pressure sales tactics could result in a hefty fine or revocation of licenses.
Despite regulatory and legal troubles and its massive debt, Nextel remains a favorite of Wall Street because of its market position, nationwide footprint, proprietary technology, management and financial backing of billionaire cellular pioneer Craig McCaw.
