In the wake of its recent string of disappointing results, Sprint is naturally keen to focus, in its public pronouncements, on future promise – especially its WiMAX ‘4G’ plans – rather than current delivery, and as it puts more flesh around its next generation network program, it is becoming bolder in its claims. At last week’s CTIA show, the company claimed a lead of a full two years over its rivals by adopting WiMAX at this early stage, rather than waiting for the next iterations of the cellular standards, LTE and UMB. Going a step further into the blind optimism that sometimes characterizes the maverick carrier’s pronouncements, CTO and president of the 4G business unit, Barry West, claimed the other two platforms would take so long to evolve that WiMAX would become the de facto basis for 4G.
‘We are already testing equipment. [It] will be fully stable and deployed to 100m points of presence by the end of next year, and there won’t be a sign of any of these other technologies,’ said West in his CTIA address. ‘So I think first mover advantage here is extremely important.’
Behind the grand claims, the company continues to fill in some of the more practical details. Its equipment and strategy choices are heavily geared to devices, which Sprint rightly sees as the key to service uptake, and it has described various specific and theoretical subscriber units, including an 802.16 version of the Nokia Internet Tablet and futuristic ‘third screen’ multimedia devices. Looking at the lower end of the market now, it is promising a single-mode WiMAX handset from Samsung, one of its three network partners, as well as a dual-mode WiMAX/EV-DO modem to bridge its two wireless networks. In addition to handsets and other units from the three network suppliers – Motorola being the other one- Sprint is expanding its client-side ecosystem rapidly, announcing at CTIA that ZTE will make single-mode 802.16e devices and USB cards, and Taiwan’s ZyXel will make WiMAX modems.
Sprint has played a major role in piquing interest in WiMAX consumer electronics, and Mo Shakouri, head of marketing for the WiMAX Forum, says that, at recent interoperability plugfests, devices have proved more advanced than base stations. This is important, given that the downfall of many past wireless experiments has been shortage of good devices in time for the network launch.
The other curse of wireless networks, on the device side, has been high costs and the pressure on operators to stimulate uptake by subsidizing these units. The WiMAX community has long held out the promise of subsidy-free CPE as a benefit of its technology over those adopted by the 3G carriers, many of them tied to their subsidies. Although some countries do no permit subsidy, and even in Europe carriers like T-Mobile have been discussing means to phase them out, they are so much part of the mobile user’s culture that it will be hard to achieve this. Hard for WiMAX too, if the devices are not very cheap, very desirable, or embedded in other equipment that the user is more accustomed to funding themselves – the secret of Wi-Fi, of course, with its inclusion in laptops and other products.
‘The old cellular model of operators subsidizing devices has to go away,’ West said. ‘With EV-DO and HSPA, heavy subsidies are being made to the PC OEMs to actually embed those technologies. Without that low cost chipset structure, it’s very difficult to make the whole ecosystem work. So that’s the fundamental difference.’
Sprint aims to take a key role in stimulating the creation of an ecosystem of chipmakers and device manufacturers – many of them from the wider consumer electronics field, rather than specifically geared to handsets – in order to drive the invention of novel form factors suited to advanced mobile internet and multimedia usage. It also believes this process will drive down costs even at the early stage of the market and encourage CE giants to embed WiMAX in a wide range of products. Combining all these factors could achieve a no-subsidy CPE model at last, argues West, even if WiMAX vendors are disappointed in one of the goals they originally set as key to eliminating subsidy – a royalty-free handset. Sprint’s new WiMAX Device and Chipset Ecosystem program is designed to facilitate dialog between chipset makers and device manufacturers.
As for the network itself, Sprint now says it will launch WiMAX in 19 cities by April 2008. The build-outs will be split between the three suppliers with Motorola taking Chicago, Detroit, Grand Rapids (a stronghold of Clearwire, in which Moto invests), Indianapolis, Kansas City, and Minneapolis. Samsung will build Baltimore, Boston, Philadelphia, Providence and Washington DC. Finally, Nokia will be responsible for developing the networks in Austin, Dallas, Denver, Fort Worth, Portland, Salt Lake City, San Antonio and Seattle.
Key to Sprint’s business model, and its potential to compensate for its smaller size compared to AT&T and Verizon, is its partnership with four cablecos, which is starting to spawn market results on the cellular side but will really reach fruition – in the shape of a wired/wireless quad play – with WiMAX. En route to this, Sprint has released a few more details of the wireless services to be launched on the current network, under the name Pivot. The integrated cable/mobile TV offering will enable customers to watch live mobile television, access TV listings using a programming guide, check home email and voicemail from one source, access the internet, place unlimited calls between their cable home service and mobile phones, and have one point for customer care and billing. The carrier did not divulge pricing for the offering, but said it was now available in eight metro areas, including Raleigh, Austin, Boston, Portland,San Diego, Phoenix, Cincinnati and Dayton, Ohio, and would be available in 40 markets by the end of the year.
The Pivot brand will be used across all four cablecos – Comcast, Time Warner Cable, Cox and Advance/Newhouse – although the phones will carry the Sprint brand and the cable logos will be seen on -screen. The next step for the joint venture will be to market bundled services to small and medium enterprises, a sector that the cable operators have been very keen to expand in. Brian Roberts, CEO of Comcast, said in January that the company’s “next great business opportunity” lies in selling its internet, voice and video services to smaller companies. He set a target of capturing 20% of the market in five years, saying that there is little competition in a market long dominated by local phone companies.
And while Sprint may be keen to divert attention to its more futuristic services as it suffers under customer and margin loss in its present networks, it should always remember that there are some things it does very well now. In particular, the carrier needs to exploit the legacy of the iDEN business it acquired with Nextel, which is unsurpassed in some applications – notably its flagship push to talk – and some sectors, often in the blue collar enterprise area. One factor in the cellco’s recent trials has been defection from iDEN by consumers, but this has been because of complaints that Sprint has not maintained the quality of the network. Where it can reassure business customers that quality is in place, it can still announce new and profitable services on the system.
For instance, last week it unveiled a speech-enabled patient information access and communications service for hospitals, which integrates iDEN push to talk with a voice-enabled Wi-Fi badge from Vocera. This is being tested at Memorial Sloan-Kettering Cancer Center in New York, to provide closer communication contact among various types of healthcare providers. The program ties in badges worn by hospital staff, which have typically run over a Wi-Fi network for in-building communication, into Sprint Nextel’s iDEN network to enable PTT connections and the ability to contact someone outside the reach of the Wi-Fi network instantly. This offers a low cost alternative to equipping all the staff with Wi-Fi phones.
Seeking to enhance the appeal of its existing EV-DO network services, Sprint has shaken up its mobile music service, initially using the new Samsung SPH-m620 phone, dubbed Upstage, which offers an MP3 player with large screen on one side and more traditional phone with keypad on the other. This will now come with new Sprint Nextel music managing software for use on the customer’s computer, the latest cellco attempt to pre-empt the launch of the Apple iPhone and its tie-in to the iTunes download software.
Danny Bowman, vice president of customer equipment for Sprint Nextel, said that the company ‘agonized’ over whether to develop its own music managing software or use a third party’s, but chose its own because it wanted to address key issues such as sideloading music from the user’s library and improving the user interface and initial set-up. The software will appear with future music-centric phones. The Upstage will retail for $150 with a two-year service contract.
‘We are taking this to another level,’ Bowman said. ‘It’s not just about the device, it’s the way we’re going to bundle our package out of the box.’ From this month, Sprint will start charging Apple iTunes-like prices for over-the-air downloads: 99 cents for a full length track, which includes a track for the phone and for the user’s PC, applied across the carrier’s catalog of over 1m songs.