Nextel Communications (NASDAQ:NXTL) knocked analysts for a loop once again last week when it reported third-quarter results. The impressive numbers continued Nextel's recent trend of blockbuster performance, distancing the company from its peers.

Nextel reported net income of $348 million, down slightly from $383 million a year ago largely due to debt retirement charges. Revenue rose a healthy 27% to $2.89 billion from $2.28 billion. Showing continued confidence, the company again raised guidance, upgrading its outlook from $1.00 to at least $1.15 EPS for the year.

But the most impressive part of Nextel is the numbers behind the numbers -- those metrics that tell how well a business is performing in a brutally competitive market. Evidence here shows that Nextel has been on a tear for the last 18 months, taking a business that was once buried in debt (and facing bankruptcy) to the highest performer among all the major U.S. wireless carriers.

The company's recent performance metrics are untouchable: 646,000 subscribers added in the quarter, average revenue per user (ARPU) of $71, and a rock-bottom churn rate of 1.4% -- the lowest rate of any carrier. Stellar operations lead to impressive cash flow -- the company now expects to generate more than $1 billion in free cash flow this year, almost double the $600 million projected earlier. But far from a one-hit wonder, Nextel's improvement has been steady for several quarters, and the writing was on the wall months ago.

Skeptics argue that Nextel owes much of its performance to its signature Direct Connect service, which is now under attack from the competition. Recently, Verizon Wireless (NYSE:VZ) launched its own Push-To-Talk (PTT) service and SprintPCS (NYSE:PCS) is rumored to launch the same by year's end. AT&T Wireless (NYSE:AWE), Cingular (a joint venture between SBC Communications (NYSE:SBC) and BellSouth (NYSE:BLS)), and T-Mobile, subsidiary of Deutsche Telekom AG (NYSE:DT), also have expressed intentions to implement similar services in 2004.

But the recent threats don't seem to be bothering Nextel. And for good reason -- since Nextel's PTT offering is proprietary, they actually stand to lose few customers. Dumping Nextel and picking up a competing service would divorce subscribers of all their walkie-talkie contacts. And since the lion's share of Nextel's customers are business accounts with multiple units, switching is a very costly proposition.

While the future is never certain, figures continue to show Nextel's making the right connections.

Dave Mock is co-author of Tapping into Wireless, the first book dedicated to investing in wireless companies. He owns shares of Nextel. He welcomes your feedback and fish stories atdave@davemock.com