Mobilcom for small fleets

Nextel's next wave.

JOHN BENDEL
TECHNOLOGY EDITOR

      Nextel Communications, which has quietly won over many regional fleets, could become a major competitor in truckload and longhaul markets — particularly among small fleets.
      In Nextel fleets dispatchers can reach drivers by cell phone call, by text message or by what Nextel calls Direct Connect, a service that turns a Nextel handset into a two-way radio or walkie-talkie. If you've ever noticed a driver holding a cell phone away from his face while talking and listening, you've probably seen Direct Connect in action.
      Nextel has been particularly attractive to small fleets because its two-way feature works entirely through the cell phone handset. No other on-board equipment is necessary.
      Nextel uses a ground-based cellular system so it doesn't work everywhere. Nextel coverage is impressive by any standard, but the Direct Connect feature so attractive to fleets only works within distinct service areas. While you can call anywhere with a Nextel phone, direct two-way communication ceases to work when a truck leaves that defined service area. That's why Nextel services are best suited to LTL and private fleets in local and regional operations.
      But incremental changes are chipping away at Nextel's geographic constraints. The company may soon provide something no one else can — direct, two-way-radio-like communication with trucks anywhere on the continent there is Nextel service.

PACKET NETWORK CREATED
      Nextel is different from most ground-based networks. The company uses Motorola's integrated Digital Enhanced Network (iDEN) packet-based technology. The Nextel iDEN network works very much like the Internet. On Nextel's "always on'' network, communications are broken electronically into small pieces of information — or packets — that travel individually to destinations where they are reassembled into their original form, be it a text message or the sound of a human voice.
      The idea emerged during the great cellular build-out of the 1980s and took form in 1987 as a company called Fleet Call, which targeted truckers and other fleet operators.
      Fleet Call changed its name to Nextel in 1992 and began an audacious march into cellular communication markets, buying up one company after another — including many two-way radio providers. By the mid 1990s, the little company from Rutherford, N.J., had elbowed its way into the big leagues with the likes of AT&T.
      Nextel stock soared when MCI, then the nation's second largest long distance phone company, sought to buy its way into the cellular business through Nextel. But the deal collapsed and Nextel's fortunes tumbled. By 1995, Nextel stock that had sold for $54 a share was offered at just over $3 a share. That's when investor Craig McCaw stepped in.
      A year earlier McCaw had sold his pioneer cellular network to AT&T for $11.5 billion in cash and stock. Initially, McCaw invested $300 million in Nextel with a promise of much more. The company began rolling out services in individual markets and by 1998 recorded its first quarter of positive cash flow.
      The recession has since taken a serious toll on cellular providers, including Nextel whose stock was trading in the $5 range in early April. Nevertheless, Nextel continues to roll out new services and expand existing ones — including Direct Connect.

DIRECT CONNECT
      New enhancements will transcend Direct Connect's geographical limitations, even though the service already works within very large regions.
      "If you're in the Georgia region, you can communicate down into Alabama and all of Georgia,'' said Beverly Hodges, director of product management.
      However, Direct Connect will soon allow users out of their own areas to contact other group members also outside the service area.
      "Let's say your home location is New York and you travel to Chicago. You'll be able to Direct Connect the people who travel to Chicago with you,'' she said.
      Hodges said this phase of enhancement would be implemented nationwide by the end of the year. The next phase scheduled for 2003 could have a much more significant impact in trucking markets.
      According to Hodges, that phase will allow Direct Connect customers two-way access back to their home coverage areas no matter what coverage area they may be in. Hodges returned to the New York/Chicago example.
      "The second phase will allow you to communicate back to New York if you've traveled to Chicago,'' she said.
      That could interest truckload and longhaul carriers. If it works as advertised, Nextel's Direct Connect will provide something fleets never really had before, two-way radio-style contact between fixed dispatch locations and drivers across the country — subject only to Nextel's coverage.
      According to senior director of marketing and public relations Chris Grandes, Nextel is also working to merge its Direct Connect and text messaging functions so that two-way users could send each other text messages even as they spoke.
      That combination could put Nextel in the small fleet driver's seat.

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