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TheStreet Open House

Nextel Shares Cool on Fed's Push-to-Talk Probe





And in a note to clients Thursday, Bear Stearns analyst Phil Cusick suggested that Nextel's direct connect subscribers could represent a walled garden of sorts, akin to the millions of AOL IM users. As part of the conditions of the merger between AOL and Time Warner (TWX), the Federal Communications Commission required AOL to create an industry standard for IM, opening the doors to competing services as the technology evolved.

Antitrust experts said they doubted Nextel's dominance of direct connect represented a monopoly, but they point out that when Motorola and Nextel joined forces in push-to-talk in the mid-'90s, the DOJ intervened to assure that rivals wouldn't be blocked. Regulators resolved the matter by limiting Nextel's two-way radio spectrum and reserving space for competitors.

Former Justice Department attorney Charles Biggio isn't surprised to see the antitrust folks involved again.

"They've had some interest in this market for a few years. And they clearly seem to be monitoring the competitive issues," said Biggio, at attorney with Akin Gump Strauss Hauer & Feld.

Biggio says the DOJ may simply want to know the terms of the settlement reached between Verizon and Nextel. Last summer, Verizon sued Nextel accusing the No. 5 wireless company of using two prototype "push-to-talk" phones to gather sensitive information about Verizon's network operations.

Given the growing importance of the walkie-talkie feature, the Justice Department is likely to try and squash any exclusive arrangements between controlling players. Nextel, the walkie-talkie standard bearer, has more than a little at stake, no matter what the outcome.

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