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Nextel: Looking to the Future
Introductory Text
EXTERNAL ANALYSIS: The external analysis will utilize the Porter's Five Forces Model (Figure 1) and will also include a discussion of the opportunities and threats facing Nextel.
Porters Five Forces: The Porter's Five Forces Model provides an excellent framework for evaluating the external conditions under which Nextel and other telecommunication network providers are competing. The first force to be examined is Threat of New Entrants. Wireless providers require infrastructure including a network of cellular towers. The massive capital outlay required to put the required infrastructure in place poses a significant barrier to entry to potential new entrants. Acquiring the telecom license required to operate is also difficult. To obtain this license, operators must apply to and be approved by the FCC, and this process can be time consuming and costly. Another significant barrier to entry is the fact that there is a finite amount of suitable radio spectrum available, and this spectrum is highly regulated and is the subject of fierce competition among current industry players. Consequently, Threat of New Entrants is LOW. The second force is Bargaining Power of Suppliers. Primary suppliers to the network operators are telecom equipment suppliers and the government agencies that effectively provide the bandwidth via regulation. The job of transmitting voice and data from place to place requires telecom equipment suppliers to provide network infrastructure (fiber optic cable networks, broadband switching equipment, etc.) and consumer electronic devices (mobil ...