Since the American government forced the divestiture of American Telephone and Telegraph (AT&T) in the early 1980s and brought about the deregulation of the industry as a whole, the market has undergone significant change. Some components of AT&T now operate as regional holding companies (RHCs) and are expanding to include both local and long distance service. The 1990s saw a significant level of merger and acquisition activity in the industry, with companies such as MCI (which brought the original antitrust suit against AT&T) joining forces with WorldCom and British Telecom becoming a factor in the American telephony market. At the same time, consumers and businesses developed a reliance on mobile telephones (actually radios) resulting in explosive growth in this segment of the market, and the original lines of local and long distance, wired and wireless, have been blurred. This research examines Nextel, a company which only came into existence in 1987, but which has grown through strategic acquisitions and shrewd planning to be a leader in the wireless segment of the telecommunications industry.
Cellular phones initially gained popularity as car phones during the 1980s, and many consumers did not realize (and still do not) that cellular phones are not truly telephones at all, but rather are radios. Instead of using traditional telephone technology, wireless phones broadcast conversations across radio frequencies which can just as easily be used for other purposes. Trucking companies and taxicab organizations have long used radio frequencies for exactly this purpose.
Recognizing the potential for non-industrial use, Nextel's founder (Morgan O'Brien) began buying up the rights to hundreds of radio frequencies which were formerly used by trucking companies and taxicab companies. Nextel purchased these frequencies in the nation's largest cities and combined access to the airwaves with its digital technology. Digital tec...