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Nextel Communications, Inc. - Wireless Service -
Category Main Page
(703) 433-4000
2001 Edmund Halley Drive
Reston, Virginia 20191
www.nextel.com
Sales
$11 billion
Business Description
We are a leading provider of wireless communications services in the United
States. We provide a comprehensive suite of advanced wireless services that
include: digital wireless mobile telephone service; Nextel Nationwide Direct
ConnectSM walkie-talkie service; and a number of wireless data applications,
including email, mobile messaging and Nextel Online® services, which provide
wireless access to the Internet, an organization’s internal databases and
other applications. For 2003, we had $10.8 billion in operating revenues and
income available to common stockholders of $1.47 billion. As of December 31,
2003, we provided service to about 12.9 million subscribers, excluding
subscribers who purchase pre-paid services under our Boost Mobile™ brand,
and had total assets of $20.5 billion, long-term debt of $10.0 billion, and
stockholders’ equity of $5.8 billion, including an accumulated deficit of
$6.3 billion.
Our all-digital packet data network is based on integrated Digital Enhanced
Network, or iDEN®, wireless technology provided by Motorola, Inc. We,
together with Nextel Partners, Inc., currently utilize the iDEN technology
to serve 293 of the top 300 U.S. markets where about 250 million people live
or work. Nextel Partners provides digital wireless communications services
under the Nextel brand name in mid-sized and tertiary U.S. markets, and has
the right to operate in 97 of the top 300 metropolitan statistical areas in
the United States ranked by population. As of December 31, 2003, we owned
about 30% of the outstanding common stock of Nextel Partners.
As of December 31, 2003, we also owned about 18% of the outstanding common
stock of NII Holdings, Inc., which provides wireless communications services
primarily in selected Latin American markets. In November 2002, NII Holdings
completed a reorganization under Chapter 11 of the U.S. Bankruptcy Code in
the United States Bankruptcy Court for the District of Delaware. Prior to
the completion of that reorganization, NII Holdings was our substantially
wholly-owned subsidiary.
Business Strategy
Our business strategy is to provide differentiated products and services in
order to acquire and retain the most valuable customers in the wireless
telecommunications industry. We also seek to drive greater operating
efficiencies in our business and optimize the performance of our network
while minimizing costs. The wireless communications industry is highly
competitive. Although we believe competitive pricing is often an important
factor in potential customers’ purchase decisions, we also believe that many
users, including businesses, government agencies and high-value individuals
who utilize premium mobile communications features and services base their
purchase decisions on quality of service and the availability of
differentiated features and services that make it easier for them to get
things done quickly and efficiently.
1. Provide differentiated products and services. We seek to provide the most
advanced suite of differentiated products and services in the wireless
industry. For over 10 years, our customers have been able to communicate
instantly within their coverage area using our Nextel Direct Connect®
walkie-talkie service. In 2003, we expanded this unique service with the
introduction of our Nationwide Direct Connect walkie-talkie service, giving
our customers the ability to communicate instantly with the over 14 million
Nextel and Nextel Partners subscribers on our networks across the
continental United States and to and from Hawaii. In September 2003, we also
expanded Nationwide Direct Connect service internationally through an
agreement with NII Holdings into the northern region of the Mexican state of
Baja California and, in 2004, we plan to further extend the reach of
Nationwide Direct Connect service in other areas of North America and into
Latin America.
Our nationwide, all-packet data network supports a comprehensive suite of
services that allows our customers to send and receive wireless email
messages and communicate through sophisticated business applications using
Nextel wireless phones in addition to laptop computers and handheld
computing devices. In the latter half of 2004, we plan to begin the
deployment of an enhancement to our existing iDEN technology, known as
WiDENSM, designed to increase the data speeds of our network by up to four
times the current speeds. We also are conducting a field trial of Nextel
Wireless BroadbandSM, an easy-to-use and secure service that connects
customers to the Internet at broadband speeds with the full mobility of
wireless service.
We believe that we differentiate ourselves from our competition by focusing
on the quality of our customer care. We have designed and implemented our
customer Touch Point strategy to improve our customer relationships by
focusing on eliminating situations that create customer dissatisfaction at
each point where we interact with, or “touch”, our customers, including
sales, fulfillment, activation, billing, network quality, collections and
overall customer care.
2. Acquire and retain the most valuable customers in the wireless industry.
Our differentiated products and services allow us to target the most
valuable customer groups in the wireless industry: small, medium and large
businesses; government agencies; and high-value individuals. Our focus on
these customer groups has resulted in our acquiring what we believe to be
the most valuable customer base, with the highest customer loyalty rate, the
highest monthly average revenue per customer and the highest lifetime
revenue per customer of any national service provider in the wireless
industry. To complement our efforts to acquire and retain these valuable
customers and to further expand our customer base, in 2003, we introduced
our new logo and the “Nextel. Done.™” branding and related advertising
programs, and, in 2004, we embarked on our 10-year title sponsorship of the
NASCAR NEXTEL Cup Series™, the National Association of Stock Car Auto
Racing, or NASCAR®, season championship series, providing unique exposure
for our products and services to an estimated 75 million loyal NASCAR racing
fans throughout the United States.
We have also been exploring other markets that may present further
opportunities for profitable growth, including through our Boost Mobile
brand, which targets the youth and pre-paid calling wireless markets in
California and Nevada. In 2004, we plan to expand the Boost Mobile brand and
services into several additional markets.
3. Seek greater operating efficiencies. We continually seek new ways to
create operating efficiencies in our business. In 2003, we outsourced our
cell site development functions to several vendors. In 2003, we also
continued to expand our customer convenient, and cost-efficient,
distribution channels, primarily through the opening of over 200 additional
Nextel stores, bringing our total to over 600 stores at December 31, 2003.
In 2003, we also continued to realize the benefits of earlier cost reduction
initiatives, including the integration of our customer data bases and
outsourcing of significant portions of our information technology and
customer care operations.
4. Optimize the performance of our nationwide network at a minimum cost. We
have built the largest guaranteed all digital wireless network in the United
States, which we designed and constructed to support the full complement of
our wireless services. In 2003, we continued to implement enhanced processes
and technologies designed to allow us to more efficiently utilize our
network and monitor its performance. These efforts have allowed us to
maintain sufficient capacity on our network while constructing fewer
additional transmitter and receiver sites than otherwise would have been
necessary to maintain network quality. In 2004, we will seek to continue to
improve our network by building additional sites where necessary to expand
our network’s geographic coverage and capacity to meet the growing demand of
our customers. In addition, we plan to introduce handsets that, together
with software that we recently installed in our network infrastructure, are
designed to more efficiently utilize radio spectrum to significantly
increase our network capacity once these handsets are in use.
Products and Solutions
We offer a wide range of wireless communications services and related
subscriber equipment designed to meet the needs of our targeted customer
groups, including small, medium and large businesses, government workers and
individuals who utilize premium mobile communications features and services.
These services and equipment have been designed to provide innovative
features that meet those customers’ need for fast and reliable voice and
data communications that allow them to get things done quickly and
efficiently.
1. Nextel Direct Connect®. One of our key competitive differentiators is
Nextel Direct Connect, the long-range walkie-talkie service that allows
communication at the touch of one button. Nextel Direct
Connect gives customers the ability to instantly set up a conference —
either privately (one-to-one) nationwide or with a group (one-to-many)
within their local calling area — which allows our customers to initiate and
complete communications much more quickly than is possible using a
traditional wireless call. Nextel Direct Connect service greatly enhances
the instant communication abilities of business users within their
organization and with suppliers, vendors and customers, and provides
individuals the ability to contact business colleagues, friends and family
instantly.
In 2003, we significantly expanded our Direct Connect service by introducing
Nationwide Direct Connect, which allows any two Nextel customers to
instantly contact one another from anywhere on the Nextel National Network,
regardless of the sender’s or receiver’s location. We completed the
introduction of Nationwide Direct Connect in July 2003. In September 2003,
we also expanded Nationwide Direct Connect service internationally through
an agreement with NII Holdings into the northern region of the Mexican state
of Baja California. In 2004, we plan to further extend the reach of
Nationwide Direct Connect in other areas of North America and into Latin
America.
Although a number of our competitors have launched or announced plans to
launch services that are designed to compete with Direct Connect, we do not
believe that the current versions of these services compare favorably with
our service in terms of latency, quality, reliability or ease of use.
2. Wireless business solutions and Nextel Online®. We offer a variety of
wireless business solutions that are designed to help companies increase
productivity through the delivery of real-time information to mobile workers
anytime and anywhere, including remote email access and mobile messaging
services using two-way text communications capabilities from their handsets.
Accessible via our wireless handsets, in addition to laptop computers and
handheld computing devices, Nextel wireless data solutions enable quick
response among workers in the field and streamline operations through faster
exchanges of information by integrating with corporate intranets and
back-office systems, such as sales force automation, order entry, inventory
tracking and customer relationship management, to support true workforce
mobility. We also design wireless business solutions to meet the needs of
specific customers based on their industry and individualized business
needs, including a wide array of fleet and workforce management services
that leverage the unique capabilities of our data network, such as the
ability to accurately and in real time, locate handsets using assisted
global positioning system, or A-GPS. Wireless business services are backed
by a comprehensive customer support service center and what we believe is
the widest range of tools available to help customers build, distribute, and
manage wireless applications. In addition, we offer our customers always-on
connectivity to the Internet directly from their handset through Nextel
Online, which combines the vast resources of the Internet with convenient
mobile content services, all from their handset.
In the latter half of 2004, we plan to begin the deployment of an
enhancement to our existing iDEN technology, known as WiDEN, that is
designed to increase the data speeds of our network by up to four times the
current speeds. We believe that this enhancement will allow us to meet our
customers’ needs for faster wireless data communications.
We believe that our wireless business solutions will contribute to customer
retention and generate incremental revenue by providing companies a
comprehensive framework for creating end-to-end wireless value.
3. Handsets. We offer all of our voice and data communications features and
services through handsets we sell that incorporate Motorola’s iDEN
technology and offer our unique 4-in-1 service, including digital wireless
service, Nextel Direct Connect walkie-talkie service, wireless Internet
access and two-way messaging capabilities. All of our handsets are developed
and manufactured by Motorola, other than the BlackBerry 7510 device, which
is manufactured by RIM. Our handsets range from basic models, like the i205
designed to serve the needs of customers who require basic wireless services
without sacrificing the essential features they depend upon to do their
jobs, to the recently introduced BlackBerry 7510, which provides integrated
access to one or multiple corporate and personal email accounts, in addition
to many of the features of digital wireless and Nextel Direct Connect
services. Our handsets offer a wide range of features, and many include a
built-in speakerphone, additional line service, conference calling, an
external screen that lets customers view caller ID, voice-activated dialing
for hands-free operation, a voice recorder for calls and memos, an advanced
phonebook that manages contacts and datebook tools to manage calendars and
alert users of business and personal meetings. All of our current handset
offerings have subscriber identification module, or SIM, cards. SIM cards
carry relevant authentication information and address book information,
thereby greatly easing subscribers’ abilities to upgrade their handsets
quickly and easily, particularly in conjunction with our on-line web based
back-up tools. Many of our handsets include pre-installed Java™ applications
and games. Java enables users to create and execute a number of mobile
applications, and supports a wide range of downloadable digital media
capabilities, such as ring tones and wallpaper that allow customers to
personalize their handset.
In 2003, we introduced a number of new handsets. In October 2003, we
introduced the i205, designed not only to serve the needs of specific
business customers, such as field services, construction and transportation
employees, but also the price conscious customer. The i205 features A-GPS
capabilities for location-based services and E911 and personalization
features, such as downloadable ring tones.
In November 2003, we introduced the i730, the most advanced handset that we
have offered to date. The i730 features A-GPS capabilities for
location-based services and E911 and numerous other features, such as Java
applications, speaker phone, voice recorder, voice-activated dialing and
audio caller identification through user-assigned ring tones, and an
expanded phone book that stores up to 600 entries.
In December 2003, we introduced the i305 and i530 handsets, both of which
feature A-GPS capabilities. These handsets are our first all-weather mobile
phones, and have been designed with a focus on durability to meet the needs
of customers in industrial sectors such as construction and public service,
as well as others who demand a phone that can resist dust, shock, vibration,
and extreme weather. The i305 features a rubber encasing and sculpted grip
for comfort, and has an interior lining and seals that protect against
exposure to rain, sleet, humidity, salt, fog and snow intrusion. It adheres
to military standards, for both rugged construction and rain-resistance, and
can withstand temperatures ranging from minus 14 to 248 degrees Fahrenheit.
The i530 features a flip-style design that is covered in a protective rubber
casing for a non-slip grip and extra durability, and meets military
standards for resistance to dust, shock, vibration and humidity.
In January 2004, we introduced the BlackBerry 7510 designed and manufactured
by RIM. The BlackBerry 7510 offers the combination of a wireless handset,
personal data assistant, color display and “always-on” wireless access to
business email capability, which allows customers to automatically and
wirelessly receive and answer email as they would on their computers with a
standard typewriter keyboard. It features a built-in cell phone with a
speakerphone, personal organizer and web browser, and supports Nextel Online
and our Direct Connect walkie-talkie services.
In February 2004, in connection with our sponsorship of the NASCAR NEXTEL
Cup Series, we introduced the NASCAR NEXTEL Cup Series Phone and ten NASCAR
NEXTEL Cup Series Driver Phones. These handsets include all of the features
of the i730 handsets and a number of unique NASCAR-related features. The
NASCAR NEXTEL Cup Series Phone displays a checkered flag and a NASCAR NEXTEL
Cup Series logo, and the NASCAR NEXTEL Cup Series Driver Phones each feature
the number and unique design, colors and signature of the particular driver.
These handsets also are pre-loaded with content especially designed for
NASCAR fans, including: wallpaper of the series logo, photos of cars on the
track, and the driver’s car number and a photo of the driver; ring tones of
familiar tunes, such as the national anthem, as well as sounds from the
track; a digital racing stopwatch; and, for Nextel Online subscribers,
access, directly from a special icon on the handset’s main menu, to
information such as a live leader board, a race schedule and driver
biographies and statistics.
We also offer the Motorola i88s and i58sr, both of which feature A-GPS
capability and Java applications. The i58sr was designed with a focus on
durability in order to meet the needs of customers in industrial sectors,
such as construction and public safety, offers a non-slip rubber grip and
adheres to certain military standards for resistance to dust, shock and
vibration, for additional protection in harsh working environments.
We also offer handsets designed specifically for local, state and federal
public safety and law enforcement agencies and organizations. These handsets
enable us to offer services specifically designed for public safety and law
enforcement officials, such as priority access and emergency group connect.
In 2004, we plan to introduce several new phones including: the i830, our
smallest and sleekest phone ever; the i860, our first of several camera
phones that we expect to introduce; the i315, our first phone to feature
“off network” two-way radio service for business and public safety users;
and a dual-mode, iDEN and global system for mobile communications, or GSM,
Smart Phone equipped with the Microsoft® Windows® Smartphone Operating
System and an integrated camera.
4. Digital media services. In 2003, we began offering customers the ability
to easily and conveniently personalize selected phones through the purchase
and download of digital media such as wallpaper patterns and musical ring
tones. Through the handset and our Nextel Online web portal, customers can
select from a large and growing catalog of digital media and applications.
5. Broadband wireless data initiative. In 2004, we began a field trial of
Nextel Wireless Broadband, an easy-to-use and secure service that connects
customers to the Internet at broadband speeds, with the full mobility of
wireless service. Participants in the trial include employees from select
Nextel enterprise customers. Nextel Wireless Broadband is expected to offer
average downlink speeds of 0.75 to 1.5 megabits per second, or mbps, with
burst rates of up to 3.0 mbps, which would make the service comparable to
digital subscriber line, or DSL, and cable broadband services. The service
will be up to 50 times faster than dial-up connections with the added
benefit of the freedom to connect without the constraints of being tethered
to the home or office or needing to search for wireless fidelity, or WiFi,
hot spots. This mobile broadband technology is Internet-protocol-friendly,
which will allow trial participants to easily connect to their main
databases and run applications. This field trial, which is expected to be
completed in 2004, is designed both to evaluate the quality and performance
of the technology being used to provide the service and to assess customer
demand, preferences and feature requirements associated with the service.
E. Our Network and Technology
1. Our iDEN network technology. Our handsets and network infrastructure
employ the iDEN technology developed and designed by Motorola. iDEN
technology is able to operate on non-contiguous spectrum frequencies, which
previously were usable only for two-way radio calls, such as those used to
dispatch taxis and delivery vehicles. We currently are the only national
U.S. wireless service provider that utilizes iDEN technology, and the iDEN
handsets that we offer are not currently designed to roam onto non-iDEN
domestic national wireless networks. Although iDEN offers a number of
advantages in relation to other technology platforms, including the ability
to operate on non-contiguous spectrum and to offer the Nextel Direct Connect
service, unlike other wireless technologies, it is a proprietary technology
that relies solely on the efforts of Motorola and any future licensees of
this technology for further research and continuing technology and product
development and innovation. We also rely on Motorola to provide us with
technology improvements designed to expand our wireless voice capacity and
improve our services. Motorola is and is expected to continue to be our sole
source supplier of iDEN infrastructure and all of our handsets except the
BlackBerry 7510, which is manufactured by RIM. See “— M. Risk Factors — If
Motorola is unable or unwilling to provide us with equipment and handsets,
as well as anticipated handset and infrastructure improvements, our
operations will be adversely affected.”
The iDEN technology shares many common components with the GSM technology
that has been established as the digital cellular communications standard in
Europe and with a variation of that GSM technology being deployed by certain
personal communications services, or PCS, operators in the United States.
The design of our network currently is premised on dividing a service area
into multiple sites having a typical coverage area of from less than one
mile to up to 25 miles in radius, depending on the terrain and the power
setting. Each site contains a low-power transmitter/ receiver and control
equipment referred to as the base station. The base station in each site is
connected by microwave, fiber optic cable or digital telephone line to a
computer controlled switching center. The switching center controls the
automatic hand-off of cellular calls from site to site as a subscriber
travels, coordinates calls to and from a handset and connects wireless calls
to the public switched telephone network. Nortel Networks Corporation has
supplied most of the mobile telephone switches for our network through
Motorola. In the case of Nextel Direct Connect, a piece of equipment called
a dispatch application processor provides a fast call setup, identifies the
target radio and connects the customers initiating the call to other
targeted customers utilizing a highly efficient, packet-based air interface
between the base station and the subscriber equipment.
Currently, there are three principal digital technology formats used by
providers of cellular telephone service or PCS in the United States:
• time division multiple access, or TDMA, digital transmission technology;
• code division multiple access, or CDMA, digital transmission technology;
and
• GSM-PCS, a variation of the TDMA-based GSM digital technology format.
Although TDMA, CDMA and GSM-PCS are digital transmission technologies that
share certain basic characteristics and areas of contrast to analog
transmission technology, they are not compatible or interchangeable with
each other. Although Motorola’s proprietary iDEN technology is based on the
TDMA technology format and shares many common features and components of GSM
technology, it differs in a number of significant respects from the versions
of TDMA and GSM technology used by other wireless service providers in the
United States.
The iDEN technology significantly increases the capacity of our existing
channels and permits us to utilize our current holdings of spectrum more
efficiently. This increase in capacity is accomplished in two ways.
• First, each channel on our network is capable of carrying up to six voice
and/ or control paths, by employing six-time slot TDMA digital technology,
or up to three voice and/or control paths, by employing three-time slot TDMA
digital technology. Each voice transmission is converted into a stream of
data bits that are compressed before being transmitted. This compression
allows each of these voice or control paths to be transmitted on the same
channel without causing interference. Upon receipt of the coded voice data
bits, the digital handset decodes the voice signal. Using iDEN technology,
our Direct Connect service achieves about six times improvement over analog
SMR in channel utilization capacity. We also currently achieve about three
times improvement over analog SMR in channel utilization capacity for
channels used for mobile telephone service. We have plans to implement
enhancements to the voice coder and related technology used in our iDEN-based
network that is designed to significantly increase the overall capacity of
our network by increasing the capacity for channels used for mobile
telephone service. See “— 3. Our technology plans.”
• Second, our network reuses each channel many times throughout the market
area in a manner similar to that used in the cellular industry, further
improving channel utilization capacity.
Motorola provides the iDEN infrastructure equipment and substantially all of
the handsets throughout our markets under agreements that set the prices we
must pay to purchase and license this equipment, as well as a structure to
develop new features and make long-term improvements to our network. In
2003, the terms of the primary supply agreements for Motorola handsets and
iDEN infrastructure expired. We are in the process of renegotiating new
long-term supply agreements with Motorola for the purchase of network
infrastructure equipment and subscriber handsets, and currently are
purchasing equipment and supplies from Motorola under interim arrangements
and purchase orders under economic terms substantially similar to those of
the expired agreements.
Motorola also provides integration services in connection with the
deployment of our iDEN network elements. We and Motorola have also agreed to
warranty and maintenance programs and specified indemnity arrangements.
In addition to the extensive domestic coverage provided on our network and
the network operated by Nextel Partners, our customers are able to travel
outside the United States and still receive the benefits of their Nextel
service where we have roaming or interoperability agreements. We have
entered into interoperability agreements with NII Holdings’ Latin American
affiliates to provide for coordination of customer identification and
validation necessary to facilitate roaming between our domestic markets and
NII Holdings’ Latin American markets. We also have roaming agreements in
effect with TELUS Corporation in Canadian market areas where TELUS offers
iDEN-based services. Furthermore, the Motorola i2000plus handset we offer is
a dual mode handset that operates on both the iDEN technology used by Nextel
and the GSM 900 MHz standard and allows digital roaming on iDEN 800 MHz and
GSM 900 MHz networks in over 80 countries. Our iDEN SIM cards can also be
placed in standard GSM handsets, such as the Motorola v60 GSM handset that
we offer, to enable international roaming capabilities. Later this year, we
plan to introduce the i930, a new dual-mode iDEN/ GSM phone, which will
further enhance our international roaming capabilities.
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