Nextel's Shine Highlights Rivals' Woes

For the full year, Nextel raised its free cash flow forecast to $1 billion from $600 million and raised its EPS forecast to $1.15 from $1.

Despite predictions that the market is saturated, growth in wireless continues. The wireless industry continues to benefit at the expense of conventional wireline services, say COO Tom Kelly and CFO Paul Saleh in an interview Thursday.

"Wireline substitution is accelerating," says Saleh. "Average monthly calling time grew to 740 minutes this year from 660 last year," says Saleh, illustrating an ominous traffic trend for the wireline telcos.

On the topic of number portability, the executives said the company with the happiest customers will do the best. "There will be a blip," says Kelly, referring to a rise in expected churn, or account losses. But nothing more, he indicates.

In wireless, customer happiness tends to hinge on factors such as network service quality. No carrier has landline-quality service all the time, but outfits such as Sprint and AT&T Wireless, especially in the Northeast, are mentioned most often as weak.

Says one Wall Street analyst: "Everyone I've talked to who is with AT&T is ditching the service on Nov. 24." Though that's an admittedly small sample, other industry observers warn that when number portability reshuffles the subscriber deck, Sprint and AT&T Wireless will likely be holding fewer customers.

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