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Cellular Firms End Dispute Over Airwaves

Verizon Drops Challenge Of Nextel's FCC Deal

By Yuki Noguchi
Washington Post Staff Writer
Wednesday, November 3, 2004; Page E01

Cellular industry arch-rivals Nextel Communications Inc. and Verizon Wireless reached an agreement yesterday under which Verizon Wireless agreed not to sue to block regulators from giving Nextel control of airwaves worth billions of dollars.

Reston-based Nextel, which is best known for the walkie-talkie service on its cell phones, will stop challenging use of the phrase "push to talk" by Verizon Wireless and other wireless providers to market their own versions of the service. Other terms of the settlement were not disclosed.

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The resolution of the companies' disputes ended months of bickering between the two companies, which spend millions of dollars on lobbying and public relations campaigns.

The agreement is a victory for Nextel, which in July received approval from the Federal Communications Commission to give back some of its airwaves and make pay $3.2 billion more in exchange for new, valuable airwaves.

Nextel carries calls over airwaves that often interfere with fire and police radio systems. The new frequencies will cause no interference. They also are considered essential to Nextel's future because they will allow the company to upgrade its systems to carry high-speed Internet traffic.

This year, Verizon Wireless mounted a lobbying campaign against Nextel's taking control of the airwaves, arguing that the deal would amount to a giveaway of valuable public resources. Yesterday it dropped those claims. "It was time to move on," said James Gerace, spokesman for Verizon Wireless.

That leaves Nextel with few obstacles to overcome before taking control of the airwaves. Within a few weeks, the FCC is to publish its formal order allowing Nextel to swap the airwaves. After that, Nextel plans to seek several changes to the rules, which could take an additional two months to finalize. The changes could reduce Nextel's required cash outlay by several hundred million dollars.

The company expects to start switching its airwaves and retuning public safety radio systems to minimize the interference problems after those rules are finalized.

Nextel spokeswoman Leigh Horner called the announcement a victory for all parties involved. "It's good news for public safety; it's good news for the industry because we can focus on competing in the marketplace."

Last year, Verizon Wireless and Nextel sued each other over use of the phrase "push to talk" in Verizon Wireless's advertisements, which Nextel was seeking to trademark. Verizon Wireless and other companies will be able to use the phrase and variations and abbreviations, such as "PTT," to market its service.

In a joint release, the companies agreed to work with the industry's trade association, the Cellular Telecommunications & Internet Association, in lobbying against regulation and taxation.

"Verizon [Wireless] took a lot of factors into consideration in deciding what to do, and they must have decided there was considerable litigation risk," said Rebecca Arbogast, an analyst with Legg Mason Wood Walker. It also could have been a public relations mess for Verizon Wireless if the company looked as if it were acting against the interests of public safety organizations, she said. Other companies could still challenge Nextel's rights to the airwaves, Arbogast said, "but it's clear that Verizon had the most resolve and the most resources, and with them having walked away from it, it really takes the wind out of the sails."

Shares of Nextel closed yesterday at $26.90 a share, up 81 cents. Verizon Wireless is a joint venture between Verizon Communications Inc. and British cell phone giant Vodafone Group Plc.

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