Nextel, Qualcomm, Motorola sign wireless deal

CHICAGO: Nextel Communications Inc. customers may soon be able to use the two

way-radio feature on their cell phones to chat with colleagues around the world

instead of just across the country.

Nextel, the nation's fifth-largest wireless operator, and wireless technology

firms Motorola Inc. and Qualcomm Inc. on Thursday said they agreed to develop a

version of Nextel's proprietary feature based on Qualcomm's next-generation

wireless network technology. The product would be available on a global basis.

The agreement ensures that Nextel will be able to upgrade its networks with a

global standard and still provide customers with its trademark two-way radio

feature Direct Connect, which allows customers to communicate quickly with their

co-workers.

Qualcomm's technology is used by about 20 percent of the world compared to

Nextel's network, which is unique. "It will allow Nextel, when we make

decisions about a move to a (next-generation) network, to have a Direct Connect

capability," Elizabeth Brooks, spokeswoman for Nextel, said.

It also expands the reach of Direct Connect beyond Nextel's network, letting

Nextel customers talk on the two-way radio with more people.

Specifically, Nextel said it signed a licensing agreement with Qualcomm to

develop a Direct Connect product for Qualcomm's next-generation Code Division

Multiple Access technology. The next-generation version called CDMA2000 allows

wireless firms to offer high-speed always-on Internet access and high quality

video and audio.

The agreement would enhance a similar two-way radio product in development by

Qualcomm called QChat.

As part of the deal, wireless technology giant Motorola, which already makes

Nextel's equipment, will integrate the infrastructure for CDMA networks and

ensure that the CDMA version of Direct Connect will be compatible with Nextel's

unique network.

Nextel said the agreement grants it certain exclusive license rights in North

America and several other international markets. While Nextel has not officially

announced its plans for upgrading its networks, analysts said Thursday's

announcement opens the door for Nextel to transition to CDMA2000, a rumor that

has been in the industry for nearly 18 months.

"The Direct Connect is a cornerstone of their proposition to its

customers," Jane Zweig, chief executive of wireless consulting firm the

Shosteck Group, said, adding that it would not make sense for Nextel to upgrade

its networks without the Direct Connect capability.

William Benton, wireless analyst with William Blair & Co., pointed out

that while Thursday's announcement gives Nextel a possible path to upgrade its

networks, it does not make it any easier or cheaper for the company to do so. A

transition from one technology to another would be a costly project.

(C) Reuters Limited.