December 20, 2004, 9:30 AM — The planned merger of Sprint Corp. and Nextel Communications Inc. would bring together not only two of the largest U.S. mobile phone operators but also two different networks and corporate cultures, according to industry analysts. Possibly more important in time, the merged company would hold most of a chunk of radio frequencies that could play a big role in wireless broadband services.
The companies announced Wednesday they will merge into Sprint Nextel, a mobile operator worth about US$70 billion with more than 35 million subscribers. Its service area will cover almost 262 million people, more U.S. residents than any other operator, they said. The merger is expected to close in the first half of next year.
Together, Sprint and Nextel may become a formidable competitor to number one Cingular Wireless LLC, itself the product of a recent merger. But Sprint Nextel has its own challenges to go along with unique assets. Chief among them will be running two networks side by side and eventually phasing out Nextel's current iDEN (Integrated Digital Enhanced Network) infrastructure.
The merger also creates an asset that could not have been duplicated by any other mobile operator deal. Together, Sprint and Nextel hold nearly all the U.S. licenses for a spectrum band at 2.5GHz called MMDS (Multi-Multipoint Distribution Service). Sprint several years ago abandoned a home broadband service using that spectrum, but since then new technologies have emerged. Among them are a system from Flarion Technologies Inc. that Nextel has rolled out in Raleigh, North Carolina, and WiMax, based on the IEEE 802.16 standard, which Sprint is studying, according to spokesman Bill White.
The first generation of standards-based WiMax, for which equipment will ship in volume starting next year, could provide wireless broadband services comparable to DSL (digital subscriber line) and cable services. A more advanced WiMax, and the current version of Flarion's technology, could deliver high-speed mobile access. Intel Corp. and several other hardware vendors see WiMax as a strong contender for broadband delivery. Intel and wireless service provider ClearWire Corp. plan to use MMDS spectrum in some markets for commercial mobile WiMax services.
"This is the spectrum band that, I think, becomes a battleground for WiMax," said Bob Egan, president of Mobile Competency, a consulting company in North Providence, Rhode Island. Other countries also are planning to use the band for high-speed wireless, opening up the possibility of selling customers a service they could use while traveling.
According to Sprint and Nextel, the merged carrier would own MMDS licenses covering 85 percent of the households in the top 100 U.S. markets. They could use that spectrum to roll out WiMax services without having to find spectrum elsewhere, as other carriers might.