Prospect of deal triggers concerns

Reports that Sprint Corp. may be close to a $36 billion takeover of Nextel Communications Inc. yesterday alarmed consumer advocates, who predicted it would lead to less competition and higher prices for wireless service.

But industry analysts said the deal would likely be approved with few major conditions by Bush administration antitrust and telecommunications regulators.

The Sprint-Nextel merger talks come less than a month after Cingular Wireless LLC closed its $41 billion takeover of AT&T Wireless Services Inc. That deal vaulted Cingular past Verizon Wireless to become the nation's biggest cellphone company, with 47 million subscribers to Verizon's 42 million.

Sprint is currently a distant number three, with 23.2 million total subscribers, 17.3 million served by the Sprint PCS brand. The rest are customers of affiliated carriers or brands including Virgin Mobile that buy Sprint service and resell it under their own name. Adding Nextel's 15.3 million customers would leave Sprint in third place, but with a much deeper base of high-spending business customers who flock to Nextel for its walkie-talkie DirectConnect service. Neither company would comment on widespread media reports that an agreement is near.

''The cell hell that many customers find themselves in is not going to get better with one fewer competitive carrier," said Janee Briesemeister, a policy analyst with Consumers Union, the publisher of Consumer Reports magazine. Her colleague, Susanna Montezelomo, noted that if the deal goes through, three companies will control 75 percent of all US wireless customers. ''That's not enough competition, and we would expect prices to go up and good deals like free long distance and big buckets of minutes to go away," Montezelomo said.

However, the chairman of the Federal Communications Commission, Michael K. Powell, predicted the merger would face easier approval than the Cingular-AT&T deal. ''They may have thorny issues, but they would not likely have the same really hard issues that were presented by Cingular," Powell said in a Dow Jones interview.

Sprint and Nextel largely focus on different market segments. Nextel counts over 90 percent of Fortune 500 firms as customers and gets more than two-thirds of its revenue from business subscribers. Sprint focuses on the mass consumer market, particularly younger adults that it woos with camera and video phones.

RBC Capital Markets analyst Jonathan Atkin said ''few significant regulatory barriers to a Sprint-Nextel merger, as four viable national competitors would remain, and the combined entity would not have excessive market power."

Deutsche Telekom's T-Mobile USA Inc. has 16.3 million subscribers in this country, but could survive as a distant US fourth as part of an international operation that counts 65 million customers.

Mark Cooper, director of research for the Consumers Federation of America, said the merger may be inevitable but is still bad for wireless shoppers. When they approved the Cingular-AT&T marriage, Cooper said, federal officials ''set such a low standard for competition at least one more huge merger was inevitable. We think consumers in the end are going to suffer."

But Judy Reed Smith, president of Atlantic-ACM, a Boston telecommunications consulting firm, predicted the Sprint-Nextel deal could actually be good for consumers and business wireless customers. ''We have been going towards Cingular and Verizon owning the game," Reed Smith said. ''I hope this will keep Sprint in the game in a way that will be good for consumers who will have three strong, large competitors."

Combining Sprint and Nextel's networks will be a huge challenge because they use two different communications technology standards. Sprint would fit more easily with Verizon Wireless because both companies use the CDMA network system, which stands for code division multiple access. Nextel uses a proprietary system developed by Motorola Inc. to support DirectConnect and phone calls, but has been looking to add a CDMA-based network for high-speed wireless data service.

Analysts generally expect that after any Nextel merger Sprint would phase out ongoing marketing of its consumer long-distance business, which has fallen behind Verizon to become the fourth largest nationally, and divest its local phone business that counts 7.7 million customers in 18 states, including big franchises in Las Vegas and Fort Myers, Fla. Sprint has pushed to increase its business acting as a wholesale service provider for other companies.

Peter J. Howe can be reached at howe@globe.com. Material from Globe wire services was used in this report.