Cellular Business

T-Mobile USA Hits 20 Million Mark

2005-11-29T23:39:00.000-08:00

By Susan Rush
November 9, 2005
NEWS@2 DIRECT
http://www.wirelessweek.com/article/CA6282674.html

T-Mobile USA managed to attract more new customers than analysts had expected, pushing its subscriber base over the 20 million mark at the end of the third quarter.

The carrier added 1.06 million new customers, which was above analyst expectations calling for 870,000 additions. In the prior and year-ago quarters, T-Mobile added 972,000 and 901,000 customers, respectively. The company ended the quarter with a base of 20.3 million.

T-Mobile USA recorded net income of $458 million, up from $387 million in the second quarter of 2005 and $254 million in the third quarter of 2004. Service revenue came in at $3.15 billion, up from $3.04 billion in the previous quarter and $2.61 billion in the third quarter of 2004.

Average revenue per user (ARPU) was $53, which represents a slight dip from the $54 reported in the previous quarter and $55 recorded in the year-ago quarter. Data services revenue increased in the third quarter and now represents 8.8 percent of postpay ARPU, according to the company.
Post-pay churn dipped to 2.4 percent from 2.6 percent a year ago.

T-Mobile USA parent company Deutsche Telekom reported a quarterly sales increase of 4.8 percent.

Paris Hilton's Cell Phone Data Hits The Web

2005-02-22T13:05:00.000-08:00

By Susan Rush
February 22, 2005
http://www.wirelessweek.com/index.asp?layout=newsat2direct&starting=7&pubdate=02/22/05

Paris Hilton is once again the center of online buzz. Over the weekend, phone numbers from the hotel heiress' Sidekick wireless device, which makes use of an online server, were posted on the Internet. T-Mobile is investigating how the information was accessed.

"T-Mobile's computer forensics and security team is actively investigating to determine how Ms. Hilton's information was obtained," the carrier said in a prepared statement. "This includes the possibility that someone had access to one of Ms. Hilton's devices and/or knew her account password."

The information, which was posted on Illmob.org and included phone numbers of Ashlee Simpson and Vin Diesel, among others, is no longer accessible on the site.

Although T-Mobile is not commenting on the specifics of the investigation, the carrier said it understands how important it is for its customers' information to be protected. The carrier said it is important for customers to take precautions to ensure the safety of their information, including by opting to password protect accounts and handsets, choosing complex passwords, monitoring account activity and notifying the carrier if any activity looks suspicious.

Last week, Nicholas Jacobson pleaded guilty to hacking T-Mobile's network. T-Mobile first discovered its network had been compromised in late 2003. It immediately notified authorities and in October 2004 Jacobson was apprehended.

Openwave Launches Outreach Express for Mobile Interactive Subscription-Based Messaging Services

2005-02-09T13:35:00.000-08:00

2/9/2005
http://www.tmcnet.com/usubmit/2005/Feb/1115877.htm

REDWOOD CITY, Calif., Feb. 9 /PRNewswire-FirstCall/ -- Openwave Systems Inc. , the leading provider of open software products and services for the communications industry today introduced Openwave(R) Outreach Express, which enables operators and MVNOs to distribute compelling rich content and information in real-time to their subscribers on any handset.

"Operators need an integrated content and messaging solution to respond to the need to grow their communities through messaging and meet the demand for subscribers' increasing interest in content being delivered to their handsets," said Scott Ellison, IDC. "Outreach Express will allow operators to perfect their user experience for push campaigns and content, enabling them to attract and retain subscribers."
Included as part of Openwave's MMS offering, Outreach Express delivers an intuitive user experience across a range of handsets for services such as campaigns around one-time events like presidential elections returns; ongoing subscriptions to information services like football, basketball, baseball, news and weather; mobile marketing campaigns; and interactive messaging services such as reality TV voting.
Outreach Express leverages Openwave's experience and best-of-breed technology for Multimedia Messaging Service (MMS). Operators utilizing Openwave Mobile Access Gateway (MAG) product will further benefit from significantly improved message delivery times and reduced total cost of ownership of the overall solution.
"Our solution is highly optimized for application-to-person traffic and is capable of driving hundreds of messages per second delivering content when users expect it most," said Rich Wong, general manager, messaging products group, Openwave. "We are committed to working with our customers to help them offer innovative services in mobile messaging."

About Openwave
Openwave Systems Inc. is the leading independent provider of open software products and services for the communications industry. Openwave's breadth of products, including mobile phone software, multimedia messaging software (MMS), email, location and mobile gateways, along with its worldwide expertise enable its customers to deliver innovative and differentiated data services. Openwave is a global company headquartered in Redwood City, California. For more information please visit http://www.openwave.com/.

CONTACT:
Nicole Arena
Openwave Systems, Inc.
+1-650-346-4293
nicole.arena@openwave.com

Nokia creates business unit for carrier network services

2005-02-09T11:51:00.000-08:00

Feb 9, 2005
http://www.rcrnews.com/news.cms?newsId=21398

ESPOO, Finland-Nokia Corp. said it will create a dedicated business unit within its Networks division that will focus on carrier services, including systems integration, consulting services, managed services and software for the automation and centralization of network and service management.

"The market for telecommunications-related professional services represents a considerable opportunity for suppliers," said Bosco Novak, Nokia's senior vice president for the Networks services unit. "In addition, there is a potential for further growth within areas that operators currently do in-house as core/non-core activity definitions are reconsidered. We will help our operator customers sharpen their edge in their very competitive markets through our comprehensive service offering, collaborative way of working and our strong dedicated team."

Nokia said the services unit will enhance the quality of service experience for subscribers with end-to-end integration across terminals, middleware and network equipment. The business accounted for more than 25 percent of Nokia's Networks division revenues last year.

In other Nokia news, the company reinforced its relationship with streaming media company RealNetworks Inc. Nokia uses the company's media player in its high-end mobile phones. The reinforcement comes in conjunction with RealNetworks' announcement that it will offer its RealAudio and RealVideo formats for use in other media players from the likes of PacketVideo and others.

FCC Clears Way For Nextel, Sprint To Merge Spectrum

2005-02-08T13:48:00.000-08:00

February 08, 2005
http://informationweek.mobilepipeline.com/news/59301933

By W. David Gardner
In the wake of the resolution of Nextel Communications' spectrum problems, the firm's next challenge will be to merge its spectrum hodge-podge into Sprint Corp.'s spectrum. Sprint is in the process of acquiring Nextel.

Nextel accepted an FCC deal for spectrum swap Monday, which the regulatory agency valued at $4.8 billion. The agreement enables Nextel to vacate spectrum used for public safety agencies and move to valuable 1900-MHz bands. The spectrum swap had been vociferously criticized by Verizon Wireless as a "giveaway," but the latter company eventually dropped its complaint.

Although Nextel's and Sprint's frequency bands are different, one wireless expert believes they can be melded together relatively easily. "Sprint already has a substantial footprint that Nextel can roll into," said Joe Nordgaard, managing director of wireless consultancy Spectral Advantage. "It's easy to look at Nextel's new spectrum as a part of Sprint's."

Sprint has announced that it will spend $3 billion in building out a nationwide CDMA EVDO network. The network uses technology developed by Qualcomm, which has supplied similar infrastructure technology to Verizon Wireless. Nordgaard noted that, in addition to its own dedicated cell-phone business, Sprint is developing a business as a Mobile Virtual Network Operator (MVNC) reselling service to cable companies.

With the FCC issue behind them, Nordgaard said, Sprint and Nextel must now deal with a new set of issues, including handset swap-outs, billing integration, and fixing incompatible interfaces. One big feature to be addressed is Nextel's popular "push to talk" feature and how it will fit into Sprint's universe.

There is even a possible hitch to the merger: stockholders still haven't approved the deal, and there is a remote possibility they could tie up the combo.

Of the final FCC approval announced Monday, FCC chairman Michael Powell said at a press conference: "It's always gratifying to untangle a knot. I would never have left if this was [not] done." Powell recently announced his intention to leave the FCC.

The spectrum swap deal calls for Nextel to give up spectrum used also by public safety agencies. The company agreed to spend at least $2.8 billion to assist in the relocation of users over a three-year period. Sprint, which is paying $37 billion for Nextel, has said it will assume Nextel's obligations in the spectrum swap.

The Next Billion Customers (3G, Virgin Mobile)

2005-02-08T13:44:00.000-08:00

There are still plenty of people in the world who want a cell phone. But the big companies could lose them to a new breed of entrepreneur.
February 14, 2005 Print Issue
http://www.redherring.com/Article.aspx?a=11232

It is January 20 and Richard Branson is talking on the phone dressed in his bathing suit, ready for a swim at an undisclosed Caribbean location. He is not discussing the bathing beauties on the beach but meetings scheduled for the next day in New York City with prospective bankers, part of a “beauty contest” to decide who will help his Virgin Group take Virgin Mobile USA public.

Virgin Mobile USA, a so-called mobile virtual network operator (MVNO), capitalizes on a brand, rather than a network infrastructure. It piggybacks on Sprint’s network but offers its own phones, customer service, pricing, and edgy advertising, along with a strategy it claims has helped it become “the fastest company in America to reach a billion dollars” in sales.

While Western Europe rapidly approaches saturation, mobile opportunities in markets that were once considered too risky suddenly look quite attractive. But only smaller, lesser-known players with foresight seem to be in a position to profit from opportunities in countries like China, India, Ukraine, Russia, and Nigeria. Established operators like Vodafone find themselves left out.

Among the smaller players, Mr. Branson is an exception. He is a well-known entrepreneur. Virgin Mobile UK had a $2-billion IPO last summer and it is rumored that similar numbers are being bandied around by Virgin Mobile USA.

For the complete story and the entire package of stories get the Red Herring Magazine issue dated February 14, 2005.

Cell-phone cinema

2005-01-28T14:47:00.000-08:00

New technology lets users watch short movies and TV shows
Jan. 28, 2005, 3:25PM
By LOUIS B. PARKS
http://www.chron.com/cs/CDA/printstory.mpl/front/3012556

Your date is late. Sitting in Sam's Boat twiddling your thumbs, you experience that most unforgivable sin of the 21st century: a moment of boredom. Taking corrective action, you whip out your cell phone, attach the earpiece. Then you:

A: Call a friend.

B: Play a game.

C: Watch an episode of 24: Conspiracy, a new spinoff series of the popular Fox TV show 24.

Options A and B? They're so over. Starting Feb. 7, new weekly mini-episodes of 24 will be ready to eliminate all fear of downtime for users of Verizon's fast new EvDO broadband service.

If you can't wait for that, Sprint already has cell-phone movies available for viewing.

"While we are speaking now, there are people watching films on their mobile phones," says Beau Buck of cell-film supplier BigDigit, Inc., which programs Sprint's mFlix, part of a media package with such offerings as CNN, Fox Sports and Cartoon Network.

Got popcorn? Mobile phones are promising to become minimovie theaters in your pocket. Bored standing in line to see Million Dollar Baby? Watch a movie or two, or three or four, while you wait.

We're not talking Titanic. Mobile movies are short — 10 seconds to three minutes. Much longer would take forever to download and require huge memory to store.

But length doesn't hamper storytelling. It only takes 12 seconds to tell the grim joke of a BigDigit's Headrush. It's about the dire consequences a man suffers when his son jumps on a rubber raft he's inflating: The man's head explodes.

So far the majority of cell-phone cinema is borrowed from other media. But that's quickly changing as filmmakers begin producing films specifically to be viewed via cell phones.

BigDigit asks its filmmakers — about 1,300 worldwide — to "take into consideration the needs of the audience," Buck says. "When people are paying, they don't want to see a Coke commercial or trailer unless it's really entertaining. We offer stuff you really can't find anywhere else, shot, or at least edited, with the mobile user in mind."

24: Conspiracy falls into the made-for-phone category. A full 24-episode season of the 60-second adventures of counter-terrorism agents already has been shot. And News Corp., which owns Fox, has even coined a name for cell-phone series: mobisodes.

"We shot 24: Conspiracy for the (small) screen of a cell phone," News Corp. vice president Lucy Hood says. "The production company (not the same that does 24) did an extraordinary job of designing specifically for a cell phone."

24: Conspiracy is already being shown in Europe, where cell-phone technology is ahead of the United States. And Hood says more series are planned. "As transmission improves on handsets, that will just add to the richness of the content," she adds.

So how does it look?

Cell-phone image quality hardly rivals high-definition television, but it's coming along.

Sprint's mFlix downloads are fast — 10-20 seconds — and the image is decent but can be jerky. There's almost no jerking with the next generation EvDO that Verizon introduces to Houston and other big cities on Tuesday. That 3G (third generation) technology, already common in Europe, has a broadband look that rivals what you'd get watching little movies on your home computer.

Screen size? Tiny. But you'll be watching your 1 1/2 -inch cell screen from inches away. The Verizon LG VX8000 phone even allows you to turn the picture sideways to get a "widescreen" effect.

Most problematic is sound. Cell speakers are small. You'll often want an earpiece.

Technology aside, the real question is, are the movies worth watching?

Well, we haven't seen Citizen Kane or Raging Bull — or even Spider-Man — on cell-phone cinema yet. The little movies range from "my little brother could do that" to "Whoa, that was cool."

Rubber Chicken Loves Surfer Girl, currently on Sprint's mFlix, is one of the former. Its 139-second sequence of still shots examines the romance between a floppy bird and a plastic surf babe who has never seen the ocean.

There's clever editing and original thought, however weird, in BigDigit's bizarrely comedic Cheap Ludes, in which a vaguely obscene-looking "being" — sometimes it's good that the screen is small — runs out of an apartment on a desperate quest for something sold in a toothpick box.

"It's drive-by entertainment on the run," says Victoria Lynn Weston, director of video content provider ZoieFilms. "You get a good quick look, whether it's a comedy or drama or preview or commercial by a creative director."

BigDigit (www.bigdigit.com) and ZoieFilms (www.zoiefilms.com) each host cell-phone film festivals. The festivals may have more to do with commercial viability than art — as most festivals do — but they suggest a growing quantity and legitimacy, and they encourage new artists and work.

Since 2003 BigDigit has hosted seven editions of the World's Smallest Film Festival in cities such as New Orleans, Toronto, Atlanta and London. Most are held in conjunction with traditional film festivals or wireless events.

Atlanta-based ZoieFilms saw nearly 100 entries in its first Cellular Cinema Festival in December.

Hot cell-phone competition has all the players looking for an edge in the race for trend-setting customers. Movies and mobisodes are one front of that fight.

"We see an audience of early adopters, people who like to be the first," says News Corp.'s Hood. " 'Look what I just did on my mobile phone.' "

As technology improves, so will the speed, length and visual quality of made-for-cell shows.

"The possibilities are endless," says Verizon's Sheryl Sellaway. "It's really limitless."

louis.parks@chron.com

Microsoft narrows loss in wireless business

2005-01-28T11:11:00.000-08:00

Jan 28, 2005
http://www.rcrnews.com/news.cms?newsId=21237

REDMOND, Wash.-Microsoft Corp. reported a 7-percent jump in overall revenues to $10.8 billion and an increase in operating income to $4.7 billion in the quarter, news that sent Microsoft's stock up slightly to $26.14 per share. Microsoft reported net income of $3.5 billion.

In the company's mobile and embedded devices business segment, Microsoft posted increasing revenues and a narrowing loss. The segment, which includes sales of Microsoft's smart phone and personal digital assistant operating systems, reported $91 million in revenues, up from the $63 million it posted in the same quarter a year ago. The segment clocked an operating loss of $4 million for the quarter, way down from the operating loss of $110 million in the same quarter a year ago.

Today's focus: What are people doing with camera phones?

2005-01-28T09:08:00.000-08:00

By Keith Shaw
Thu 1/27/2005 6:10 PM

In a recently released survey, online photo service provider
Snapfish revealed that 56% of those surveyed (500 Americans)
said they think camera phones will replace digital and film
cameras within the next two decades.

Despite the big 20-year prediction cycle (won't we have flying
cars and time machines by then?), the survey offers some
additional data regarding the use of camera phones by consumers
these days.

For example, 62% of camera phone users are storing their images
on their phones rather than using a storage or sharing option.
Snapfish argues that this proves that getting photos off the
phone so people can do what they want with them remains one of
the biggest issues for camera phone users. While that rings
somewhat true, I'd also argue that image quality on the phones
is another driving reason - there's no reason to really transfer
the photo to make a print if the end result is a lousy photo.
Also, since most camera phones don't have memory card slots
(yet), transferring the photos from the phone to a PC or an
online service is a really big hassle. With more camera phones
coming out with new memory card slots (especially Trans-Flash
memory cards), storing and transferring photos will become much,
much easier.

In the Snapfish survey, poor picture quality was the biggest
gripe about camera phones (61%); also cited was the high cost of
sharing (31%) and difficulties in transferring photos to an
online service or PC (25%). Only 22% of camera phones are
printing their images, despite interest from 73% of those
surveyed. Again, photo print quality (80%) and price (63%) were
cited as the most important criteria for printing photos from a
camera phone.

New camera phone features that got the highest interest included
zoom (52%), automatic transfer of photos to a PC (45%) and a
flash (42%). And for the most part, people are taking photos
with their camera phones in pretty much the same places that
they take photos with digital or film cameras: at home (75%),
family gatherings (58%) or on vacation (45%).

More interesting were some of the new places people were taking
photos with their camera phones: at work (40%), sporting events
(33%), on dates (17%) and at the birth of a new child (13%). The
survey didn't say whether the photos were taken in the actual
delivery room, or after in the recovery room. And what kind of
photos are people taking with camera phones while on a date? Are
people taking photos of their blind dates so they can show to
friends later?

Anyway, the survey has me intrigued to poll the readership on
the current state of camera phones. Do you have one yet? What
have you been taking pictures of? Do you transfer the photos off
the phone, either to an online service, another phone (via
Multimedia Messaging Service) or e-mail address? Do you print
the photos?

Send e-mail to , and if you feel like it,
tell me what we'll see first in the next 20 years - a good
camera phone or flying cars.

Fidelity Select Wireless (RIMM Merger with NOK/MOT?)

2005-01-26T10:12:00.000-08:00

Fidelity Select Wireless
http://www.investors.com/breakingnews.asp?journalid=25056500&brk=1

Fidelity Select Wireless must be enthusiastic with the Sprint-Nextel merger. The fund continues to maintain Sprint and Nextel among its top 10 holdings.

While the Alltel-Western Wireless transaction was announced on Jan. 10, Western Wireless from slipped from the fund's top 10 holdings as of Dec. 31. Alltel also failed to make the top 10 cut in Fidelity Select Wireless. This is one company that has the makings of a target. Verizon (VZ) and Sprint could well eye Alltel given the commonality of CDMA wireless standard they use.

Given the brutal battle for market share, handset and smart phone manufacturers may well benefit from consolidation. A thought that has recently surfaced is Research in Motion (RIMM) being an attractive target for both Nokia (NOK) and Motorola (MOT).

Fidelity Select Wireless has just upped its exposure to the handset segment by adding Motorola to its top 10 holdings while continuing to include Nokia and Research in Motion.

Top execs at Sprint, Nextel to get large incentives

2005-01-24T11:19:00.000-08:00

Jan 24, 2005
http://www.rcrnews.com/news.cms?newsId=21163

NEW YORK-Sprint Corp. and Nextel Communications Inc. noted in Securities and Exchange Commission filings that they are offering a number of top executives bonuses if they stay with the carriers following their planned $35 billion acquisition, scheduled to close later this year.

Sprint said in its filing that its compensation committee of the board of directors agreed that all executive officers-excluding Gary Forsee, current chairman and chief executive officer, and Len Lauer, president and chief operating officer-would be eligible to receive cash incentives of 100 percent of their base salaries and short-term incentive targets. Half of the cash incentives would be paid once the merger closes, with the remaining incentives paid a year later.

Forsee will be named president and CEO of the newly named Sprint Nextel, while Lauer will serve as COO of the new company.

The filing also noted that the president of Sprint's local telecommunications division, which the carrier said it plans to spin off as part of the merger, would receive the incentive payment at the time of the spinoff as well as the one-year anniversary of the spinoff.

Published reports indicated Nextel's plans call for top executives to collect their annual base salaries and performance bonuses, as well as one-time payments equal to 150 percent of salaries and bonuses following the merger. Current Nextel President and CEO Tim Donahue, who earned a reported $29.4 million last year in salary, bonuses and stock options, would receive a separate employment retention agreement. Donahue is scheduled to become chairman of Sprint Nextel following the merger.

New consumer research calls Cingular top wireless performer

2005-01-19T11:34:00.000-08:00

But high expectations for Sprint Nextel
By Dan Meyer
Jan 19, 2005
http://www.rcrnews.com/news.cms?newsId=21107

A consumer survey conducted by independent research firm Adjoined Research singled out Cingular Wireless L.L.C. and Verizon Wireless as top-performing companies in the wireless sector, but noted that the pending merger between Sprint Corp. and Nextel Communications Inc. could capture the top spot among all types of communications providers.

The survey, which was included in the Adjoined report "Communication Demand 2005: How Americans Spend Their Communications Dollars," ranked Cingular as the top-performing company among the five nationwide wireless operators. Verizon Wireless was ranked second, followed by Nextel, T-Mobile USA Inc. and Sprint PCS.

Adjoined noted that compared with other telecommunications services-wireline, wireless, cable/satellite, Internet and integrated-"the desires and expectations in the wireless industry" were higher than other telecommunication offerings, "which includes core attributes about brand and image." Adjoined attributed the results to successful advertising having raised consumer expectations among wireless operators.

The survey also ranked Verizon Wireless and parent company Verizon Communications Inc. as the top-performing integrated telecommunications provider. Adjoined noted that more than 92 percent of those surveyed said they saw the benefits of on integrated provider for their communications needs, with nearly 45 percent touting the convenience of a single-bill, one-stop shopping and single phone number/voice mail.

Adjoined also analyzed the possible impact of a Sprint/Nextel merger on the communications industry, reporting that the combined entity posted the highest ratings across the 12 competitive attributes measured.

"Should the merged Sprint-Nextel be able to optimize the best of each company-a huge task-the only two attributes remaining at risk from a consumers' perspective are price and geography-something that a merger should be able to improve through cost controls and expanded presence," Adjoined explained.

Vidiator scores content deal with Marvel comics creator

2005-01-19T10:31:00.000-08:00

By COLIN GIBBS
Jan 18, 2005
http://rcrnews.com/news.cms?newsId=21079

Mobile messaging company Vidiator Technology Inc. announced its first big step into the mobile content market this week when it unveiled a deal with noted comic-book author Stan Lee.

Lee, the creator of noted Marvel comics characters Spider-Man, The Hulk and X-Men, will develop video clips and avatar applications based on creations from POW! Entertainment Inc., which he founded two years ago. The service, which is expected to come online with several wireless carriers worldwide during the next few months, initially will feature POW! characters such as The Drifter, The Accuser and Stripperella.

Vidiator, which provides transcoding and delivery of content within multimedia messaging service networks, has enabled live broadcasts of concerts, traffic conditions, sporting events and the "Big Brother" reality show over third-generation networks. The partnership will feature the use of Vidiator technologies such as VeeStream, a mobile streaming platform, and Vee3D, an interactive messaging platform featuring animated talking figures dubbed avatars.

The company said it approached Lee about taking his characters mobile, and the deal could establish a new business model for developing mobile content. While the first offerings will feature existing POW! characters, Lee will use the partnership to create content and characters exclusively for mobile, using the platform as a launching pad for other marketing opportunities.

"(Lee) wants to start from the mobile side first," said Connie Wong, founder and chief executive officer of Vidiator's U.S. operations. "He will develop new characters, new stories and applications exclusively for the mobile space."

However, Lee's most famous characters are spoken for. Mobile publisher Mforma announced a deal in November that granted rights to more than 5,000 Marvel characters, including Spider-Man and X-Men. The agreement covered movies, television, video games and comic books, giving Mforma an enormous reservoir of the comic giant's content and a nearly endless stream of mass-marketing opportunities.

POW!, on the other hand, went public just last June and has struggled. Since opening at $2.10 per share in its market debut, the pink sheets stock has plummeted to 30 cents.

"This expansion into wireless was about as inevitable as it gets," said Gill Champion, chief executive officer of POW! Entertainment. "We see the importance of this relationship with Vidiator establishing new POW! franchises on a global basis with interactive capabilities and capitalizing on an incredible delivery schedule."

Lee's characters are certain to set the new agreement apart from the Mforma deal as well. In contrast to more innocuous family-friendly superheroes, POW!'s portfolio includes Baad Alienz and Hef's SuperBunnies, an elite crime-fighting team of former Playmates of the Month.

Like the Mforma deal, Vidiator's agreement calls for a slew of entertainment applications, as well as the development of at least one mobile channel under the brand name "Stan Lee's POW! Mobile.

Alltel holds cards for future jackpot

2005-01-15T11:03:00.000-08:00

By Jeffry Bartash, CBS.MarketWatch.com
Last Update: 5:12 PM ET Jan. 14, 2005
http://cbs.marketwatch.com/news/story.asp?g=345222B1B711433FBDE78ACBCBDE0ECF&siteid=mktw&dist=nbs

WASHINGTON (CBS.MW) - The regional wireless phone carrier Alltel has engaged in $18 billion worth of acquisitions over the past six years, but the biggest deal, by far, is yet to come.

Eventually, many analysts expect the Little Rock, Ark.-based firm to get bought out by one of the large national carriers, most likely Verizon. Yet such a deal could be at least several years away.

The big carriers, for their part, already have their plates full. Several have just concluded massive acquisitions and all are carrying sizable debts. Intensifying competition has only complicated the situation.

Alltel (AT: news, chart, profile) itself appears in no hurry to depart. The carrier, run by the grandson of the company's co-founder, is an Arkansas institution with deep local roots. It's been around a long time and is known for taking the long view.

Investors can afford to take the long view as well given Alltel's solid financial performance. Taking dividends and earnings into account, Alltel has generated higher returns over the past five years than Sprint, Verizon, BellSouth and SBC Communications.

That's why Wall Street has rewarded the company with a market value of almost $17 billion. Indeed, Alltel now tops AT&T (T: news, chart, profile), one of the most storied names in American business.

Over its long history, Alltel has also raised its dividend 44 straight years, a clear sign of its ability to generate hard cash, the lifeblood of any truly successful company. Alltel is not a "bubble" baby or stock-market mirage.

"We are grinders," Chief Executive Scott Ford told investors after the proposed $6 billion acquisition of Western Wireless was unveiled Monday. See full story.

Rural roots

Alltel, founded in 1943 to deliver local phone service to rural Arkansas, first entered the wireless-phone business in 1985.

While Alltel enjoyed steady growth over the next decade, the carrier didn't truly break onto the national scene until the crucial 1998 acquisition of 360 Communications, a mid-sized wireless carrier that once belonged to Sprint (FON: news, chart, profile).

Over the next few years, the company snapped up a handful of other properties and signed a ground-breaking "roaming" agreement that let Verizon use Alltel's wireless network at shockingly low rates, at least by then-industry standards.

Although the cut-rate deal initially took a bite out of Alltel's sales growth, the agreement enabled Alltel to offer national calling plans on par with the largest U.S. wireless companies. Fully 40 percent of its customers now choose national plans. And they tend to be the most loyal and profitable of Alltel's wireless subscribers.

"We are the only regional player in this country that, by virtue of this roaming agreement, can compete like a national player," Ford said.

Because Alltel uses the same wireless technology as Verizon -- the CDMA standard created by QualComm -- investors have long viewed the company as a potential takeover target.

Yet the very success of the roaming deal has turned into a key deterrent. Why should Verizon (VZ: news, chart, profile) spend large sums of money to extend its wireless network to vast though sparsely populated Southern and Western territories?

"Verizon has a fantastic roaming deal with Alltel," noted Kevin Roe of Roe Equity Research.

Other fish to fry

Verizon has other reasons to stand pat.

For starters, the company has been wildly successful over the past few years without any major purchases. It has more than 42 million customers and could soon overtake Cingular for the No. 1 position. Cingular, owned by SBC (SBC: news, chart, profile) and BellSouth (BLS: news, chart, profile), leaped past Verizon with its recent acquisition of AT&T Wireless.

Verizon is also gearing up for a costly battle with cable-television operators like Time Warner and Comcast, which are swiftly moving into the phone business. The company plans to spend billions of dollars to link customers via fiber-optic links in an effort to slow the decline in its large local phone business.

The acquisition of Alltel, once its pending purchase of Western Wireless is complete, could cost well over $20 billion. Yet Verizon isn't exactly eager to add to its $40 billion debt.

With another five years to run on its roaming agreement with Alltel, Verizon can bide its time, analysts say.

Beyond Verizon

Other large wireless carriers, meanwhile, are in no position to make a bid.

Sprint (FON: news, chart, profile) uses the same CDMA technology as Alltel, but the company just announced a $35 billion acquisition of Nextel Communications (NXTL: news, chart, profile).

Similarly, Cingular is preoccupied with its recent $40 billion purchase of AT&T Wireless. And the smaller T-Mobile is owned by the financially hamstrung German firm Deutsche Telekom (DT: news, chart, profile) .

That's not to say none of those companies would find Alltel attractive. Indeed, a combined Alltel-Western Wireless would be the largest roaming partner for all four national wireless carriers in a wide swath of middle America.

Alltel-Western Wireless, in fact, would cover more actual U.S. territory than any of its larger rivals.

"It is the largest physical network in the country -- bigger than Verizon's, bigger than Cingular's, bigger than T-Mobile, bigger than Sprint," Ford noted.

"There are not many people out there, but there's an awful lot of territory and a lot of people end up driving around it a lot of their time," he said.

Ford wants to cement those relationships -- and deter the big carriers from expanding their networks into Alltel's territory -- by keeping roaming rates low.

"We intend to aggressively price roaming so as to continue to incent the four national players to use our network," he said.

Of course, that can only make Alltel more valuable to everyone. If Ford plays his cards right -- he likes card metaphors -- any attempt by one big carrier to purchase Alltel could launch a bidding war.

Down to the wire

With the potential sale of Alltel probably years away, however, the company has lots of work to do.

First Alltel has to wrap up the acquisition of Western Wireless (WWCA: news, chart, profile). It hopes to complete the deal by late spring or early summer. The combined company would have 11.5 million customers and $10 billion in annual sales.

At the same time, Ford promises a close review of the company's wireline-phone operations. Most investors took Ford's comments to mean he will sell its landline-phone business given that the wireless will soon account for nearly 70 percent of Alltel's revenue

Yet at a Wall Street conference a day later, Ford took pains to dampen such speculation. "That is not what we said," he noted. "We may decide to do nothing."

Granted, the landline business is in long-term decline, but it still generates higher profit margins and almost as much operating income as the wireless business. Alltel's DSL, or high-speed Internet service, has been a standout performer.

In the third quarter, for instance, Alltel's landline unit posted a margin of 56 percent and operating income of $228 million, compared with 38.2 percent and $288 million for wireless.

Just as important, the company's landline network can carry some of Alltel's wireless traffic at little cost, and the carrier can also "bundle" a variety of phone services to keep customers loyal.

"Those who have landline and wireless will be in much better shape because they can bundle," said Jane Zweig, chief executive of The Shosteck Group, a wireless consultancy.

Keeping the unit, however, might prove an obstacle to an acquisition. Indeed, Verizon sold 600,000 phone lines in Kentucky to Alltel three years ago for a tidy sum of $2 billion. And Verizon would like to get rid of even more local lines in less densely populated markets.

Analysts say the spinoff of Alltel's landline business would be the first clue that a potential merger could be in the offing.

"It's inevitable that they will be acquired at some point," Roe said. As Alltel has shown, though, good things can come to those who wait.

T-Mobile Network Gets Hacked

2005-01-13T11:20:00.000-08:00

By Susan Rush
January 13, 2005
http://www.wirelessweek.com/index.asp?layout=print_page&doc_id=1340002969

A hacker who managed to worm his way into T-Mobile USA's network and access customer's personal information was recently indicted in California.

In late 2003, T-Mobile discovered someone had obtained unauthorized access to its one of its internal computer systems. The carrier immediately sought the help of the U.S. Secret Service to apprehend the hacker.

"Our investigation revealed that this third party was able to view the name and Social Security number of 400 customers," T-Mobile said in a statement. While customers' personal information was accessed, the hacker, according to T-Mobile, viewed no credit card information. T-Mobile notified affected customers in writing of the incident.

The alleged hacker is 21-year-old Nicholas Jacobsen, a computer engineer. "This same person is also believed to be involved in other attempts to gain unauthorized access to customer information. The Secret Service is investigating these allegations, and T-Mobile is cooperating to the fullest extent, including with regard to the allegations that customer photos have been subject to unauthorized access," T-Mobile said.

Jacobsen was recently indicted in California. "We are pleased that he is being brought to justice," T-Mobile said.

Calling All Advertisers (Mobisodes)

2005-01-13T11:17:00.000-08:00

Penelope Patsuris, 12.17.04, 2:47 PM ET
http://www.forbes.com/2004/12/17/cx_pp_1216mobiletv_print.html

Think you'd never ask for an ad? You might.

The producers of the hit TV series 24, which airs on Fox Entertainment Group's (nyse: FOX - news - people ) Fox Broadcasting network, are creating short, promotional videos that will be broadcast to cell phone customers who sign up to receive them. The free, one-minute videos won't be clips from the existing show but rather mini-dramas based on the series, using different actors.

They'll first be made available via Vodafone's (nyse: VOD - news - people ) U.K. wireless service in January, coinciding with the launch of 24's fourth season. In the U.S., Fox parent News Corp. (nyse: NWS - news - people ) has a deal with Verizon Wireless, partly owned by Vodafone, to make the videos available to customers using its new 3G high-speed service, which should be available in the first half of next year. These kinds of promotional streaming videos are expected to start popping up on cell phones all over the U.S. in 2005, as providers like Cingular, the BellSouth (nyse: BLS - news - people )-SBC Communications (nyse: SBC - news - people ) joint venture, also roll out 3G services.

Welcome to the latest marriage of entertainment and marketing. These mobile episodes, or "mobisodes" as they've been dubbed, will serve an astonishing array of functions in 60 seconds: They will entertain, promote a TV series and pitch 3G services, as well as the fancy phones we need to use them.

Marketers are betting that if the content is short, entertaining and, of course, free, consumers will sign up for videos like 24. They point to similar text-messaging campaigns: Mobile Media North America runs a program for The Walt Disney Co.'s (nyse: DIS - news - people ) ABC networks called Soap [Confidential], which gives fans text-message alerts and inside scoops on All My Children, General Hospital and One Life to Live.

Neither Disney nor Mobile Media will disclose fan numbers for Soap [Confidential]. But a previous text-message campaign for All My Children's Sexiest Man in America Contest drew some 2.5 million online and text-message votes. Fans also sent in more than 2,000 other text messages during the contest. Mobile Media is also partnered with News Corp., Spanish-language broadcaster Univision Communications (nyse: UVN - news - people ) and The Weather Channel.

And it may not matter to cell customers that they are using their minutes to watch an ad. "As long as the programming is relevant to consumers, they don't really consider it marketing," says Chris Colburn, an executive at Interpublic Group's (nyse: IPG - news - people ) interactive marketing unit R/GA, who is not involved with the 24 project. "Especially if it's something that they've opted into."

In a world of TiVo (nasdaq: TIVO - news - people ) and pop-up blockers, he says, advertising will increasingly be presented using media that's requested, or pulled, by consumers rather than pushed at them.

The mobisode format won't be limited to existing programming. "These programming spots will be most effective when they are unique spinoffs of a known property that's only available via cell phone," says Colburn, "as opposed to re-purposing something that you can already see on TV."

And that property doesn't have to be a TV show. "Any consumer product company could create their own mobisodes," says Colburn, and they will, using the same stars that headline their commercials. A Nike (nyse: NKE - news - people ) spot could star Michael Jordan, while one for PepsiCo (nyse: PEP - news - people ) might feature Britney Spears.

"Savvy advertisers," adds Colburn, "will create free content that can be sent to cell phones in advance of the paid versions coming to market."

35 bidders certified for upcoming 1.9 GHz auction

2005-01-12T18:21:00.000-08:00

By Dan Meyer
Jan 12, 2005
http://www.rcrnews.com/news.cms?newsId=21032

The Federal Communications Commission has certified 35 bidders for its upcoming Auction 58 that will include 242 spectrum licenses in the 1.9 GHz band scheduled to begin Jan. 26. The FCC has set aside 119 licenses for so-called designated entities, while the remaining 123 licenses are available to all bidders.

Similar to the FCC's ill-fated Auction 35 in early 2001, many of the designated entities set to participate in Auction 58 are affiliated with more established wireless players, including Edge Mobile L.L.C./Cingular Wireless L.L.C.; Vista PCS L.L.C./Verizon Wireless; Wirefree Partners III L.L.C./Sprint Corp.; and Cook Inlet/T-Mobile USA Inc. Additional carriers participating through bidding partners include Leap Wireless International Inc. through Alaska Native Broadband L.L.C., U.S. Cellular Corp. through Carroll Wireless LP, and MetroPCS Inc. through Royal Street Communications L.L.C.
continued below

Verizon Wireless and Leap are also participating in the auction of non-DE licenses, along with Centennial Communications Corp., Triton PCS Inc. and Midwest Wireless.

Analysts noted that bidding strategies have likely changed following a rash of merger and acquisition announcements, and those companies that have not participated in the recent deals are expected to be the most likely drivers during the auction.

Auction 35 generated more than $16 billion in bids mostly through the attempted re-auction of NextWave Telecom Inc.'s spectrum. The FCC has set minimum opening bids of $752 million for all 242 licenses available in Auction 58.

Zafirovski Resigns Motorola Post

2005-01-12T10:46:00.000-08:00

By Susan Rush
January 12, 2005
http://www.wirelessweek.com/index.asp?layout=newsat2direct&starting=2&pubdate=01/12/05

Mike Zafirovski has resigned as Motorola's president and COO, effective Jan. 31. Zafirovski says he is ready to pursue "other opportunities."

Speculation began circulating that Zafirovski would exit Motorola back in December 2003 when Ed Zander, a former Sun Microsystems executive, was tapped to take over for outgoing CEO Christopher Galvin.

Zafirovski, who will stay on in an advisory role during the transition, was credited with returning profitability to Motorola's handset division a few years ago. He was appointed COO in July 2002 after Ed Breen exited the company to run troubled Tyco International. He was promoted to president in 2003.

Motorola recently announced plans to revamp its business structure to better align the company with its seamless mobility strategy. Effective Jan. 1, Motorola realigned its business into four groups: personal devices; networks; government and enterprise; and connected home.

When the reorganization was announced in mid-December, Motorola said the revamped structure would enable it to capitalize on its ability to cross-sell products and services.

Motorola shares were down 9 cents to $16.55 at one point in late morning trading action on the Nasdaq.

Mergers Lifted Telecom Stocks In 2004

2005-01-12T03:00:00.000-08:00

David Ng, 01.12.05, 6:00 AM ET
http://www.forbes.com/2005/01/12/cx_dn_0112telecomscream_print.html

For a few months in late 2004, it seemed like every wireless provider was merging or looking to merge with the competition.

Cingular closed the purchase of AT&T Wireless for $41 billion in late October, creating the No. 1 carrier in the country. Scarcely a month later, rumors began swirling that Sprint (nyse: FON - news - people ) was looking to acquire Nextel Communications (nasdaq: NXTL - news - people ). Merely days later, Verizon Communications (nyse: VZ - news - people ) was also said to be in the bidding for Sprint, or Nextel, or both. But it wasn't to be. On Dec. 15, Sprint formally agreed to acquire Nextel for $36 billion. The deal, scheduled to close in the second half of 2005, will create the country's third-largest wireless carrier.

Such was the year in telecommunications: dynamic, unpredictable and, for the most part, profitable for shareholders. The telecom services sector in the S&P 500 rose 16% in 2004, a considerable improvement over the 3.3% gain in 2003. For the year, the S&P 500 as a whole rose 9%, and telecom services account for only a tiny slice of the index--just 3.27%.

Wireless stocks led the way with an overall gain of 57.3%, though it was down considerably from 2003's 77.7% rise. Analysts say the sector added as many as 20 million subscribers for the year, versus 17.7 million in 2003, raising the penetration rate to more than 60%. Meanwhile, integrated telecommunications stocks rose 9.3%, versus a decline of 4.3% in 2003.

Telecom's top performer was Sprint, up 51.3% for the year. The stock spent most of 2004 below the $20 mark before taking off in November, ending the year at $24.85. This marks the first time in three years the stock has closed above $20, though it is still nowhere near its pre-2001 highs of around $70. Besides the Nextel purchase, Sprint's key drivers for 2004 included a possible deal with Time Warner (nyse: TWX - news - people ) to provide wireless services to cable subscribers, and expectations that revenue will continue to grow into 2005, helped mainly by wireless business.

In second place, Alltel (nyse: AT - news - people ) rose 26.1% for 2004 to end at $58.76, driven by strong earnings throughout the year, as well as its acquisition of certain AT&T Wireless assets from Cingular. Verizon placed third, registering a 15.5% increase for the year to close at $40.51. Both Alltel and Verizon posted most of their gains in the second half of 2004, with Verizon jumping nearly $5 in August on news that it had beat second-quarter estimates.

Rounding out telecom's top five are Citizens Communications (nyse: CZN - news - people ), rising 11% for the year, and CenturyTel (nyse: CTL - news - people ), which rose 8.7%. Meanwhile, SBC Communications (nyse: SBC - news - people ) and BellSouth (nyse: BLS - news - people ), which jointly own Cingular, both posted declines for the year of 1.2% and 1.8%, respectively.

Wireless wasn't the only big telecom story in 2004. The Federal Communications Commission made its presence felt in several fields. It officially classified voice-over-Internet protocol (VoIP) as an interstate service exempt from state regulation. The agency retired the UNE-P rule, which compelled regional Bell operating companies to lease some or all of their lines to competitors. And the FCC continued to push for deregulation in broadband services.

So far, 2005 shows signs of continuing many of the same trends of 2004. Regional Bells will continue losing customers to wireline-to-wireless migrations, with some analysts estimating access line loss in a range of 5% to 6% for the year. Consolidation in wireless is likely to continue in full force, with Alltel announcing this week an agreement to acquire Western Wireless (nasdaq: WWCA - news - people ) in a transaction valued at $6 billion. Analysts expect VoIP subscriber growth of at least 150,000 per quarter, which could rise as high as 300,000 per quarter.

Telecom's Top Five
Company Name 2004 Price Change P/E 2004 Closing Price
Sprint (nyse: FON - news - people ) 51.3% 32.9 24.85
Alltel (nyse: AT - news - people ) 26.1 17.7 58.76
Verizon Communications (nyse: VZ - news - people ) 15.5 33.7 40.51
Citizens Communications (nyse: CZN - news - people ) 11.0 53.3 13.79
CenturyTel (nyse: CTL - news - people ) 8.7 14.5 35.47

tern Wireless CEO Stanton to unwind after cellular deal

2005-01-11T14:54:00.000-08:00

Tuesday, January 11, 2005
Western Wireless CEO recounts 'painful' sale, keeps options open
By DAN RICHMAN AND JOHN COOK
http://seattlepi.nwsource.com/business/207373_western11.html

When Alltel closed on its $6 billion purchase of Bellevue's Western Wireless Corp. late Sunday, it ended the final chapter of Western Chief Executive John Stanton's 17-year history of starting and running six cellular companies.

And it opened the door to surprises from a man with an outsized supply of both ideas and energy.

Stanton, 49, is roughly $471 million richer thanks to the sale, so he can afford to do whatever he wants. But whatever that is, he just wants to relax a little first.

"God's truth: I don't know what's next," he said in a phone interview as he left New York City, where the deal was completed at about 10:30 p.m. PST Sunday. "Frankly, I want to decompress. I'm carefully planning my Little League baseball season coming up."

Negotiations with Little Rock, Ark.-based Alltel Corp. were painful, he said, because he and other Western Wireless executives had to give up control over a company they had built from nothing.

"I've been on the boards of six different wireless companies over the past 20 years, and I don't recall ever seeing tears before yesterday," he said. "It was very, very hard. No one wanted to do it, but all of us realized it was the right thing to do."

Advanced Digital Information Corp. Chief Executive Peter van Oppen, who has served on the Western Wireless board periodically for the past 14 years, said the sale had "bittersweet elements" because it meant the end for a team that has worked together for more than a decade.

"A lot of the people at Western Wireless went all the way back to the beginning," van Oppen said.

The company, which Stanton and his wife, Theresa, co-founded 17 years ago, sold for about $4 billion, plus the assumption of roughly $2 billion in debt, in a deal allowing the exchange of each Western Wireless share for 0.535 shares of Alltel stock plus $9.25 in cash. As alternatives, shareholders will be able to choose an all-cash or an all-stock buyout. The transaction is expected to close by midyear.

While cellular rivals were growing through acquisition, Western Wireless did not, Stanton said. If he had refused to sell now, the business's value might have declined.

"As it is, we're selling from a position of relative strength, which allows us to dictate terms that are beneficial to us," he said.

Due back in Seattle by the weekend, Stanton said he will consider other business opportunities and the possibility of running for public office -- once he's unwound a little with his wife and two sons.

The Bellevue native reportedly turned down an invitation from the state's Republican Party to run for governor in 2004.

"John could do about anything he wants in either business or politics," said Seattle venture capitalist Tom Alberg, who was hired by Stanton at McCaw Cellular in 1990. "I am inclined to think that he will continue to be active, and my guess is in business."

Alberg, a founder of Madrona Venture Group, calls Stanton "one of the most talented and successful entrepreneurs of the last 20 years" in Seattle.

Others who know Stanton do not expect him to sit on the sidelines for long. Friends describe him as passionate, competitive and very smart.

"He is very talented and intellectual, so he can handle a lot of actions at any one time," said Ignition Partners' Steve Hooper, who met Stanton at McCaw Cellular in the early 1980s. "I don't think he will stop and do nothing."

Unlike some executives of publicly traded companies, Hooper said, Stanton knows how to balance work and family.

"He was the T-ball coach for his son," Hooper said. "Not many CEOs of companies do that." He has also remained true to his school, serving as a trustee at Whitman College in Walla Walla and recently heading up the search for a new president.

Van Oppen, who has known Stanton from the time they were political science majors at Whitman, said he does not know what step the wireless executive will take next. Before starting the companies that became Western Wireless and T-Mobile, Stanton took a short hiatus from the telecommunications business to travel and ski, recalls van Oppen.

"Frankly, it looked to outsiders like they got a little stir-crazy and wanted to get back into the fray," he recalls. "We are all curious to see if that happens again."

Whether Stanton enters politics or starts a new business, van Oppen expects Stanton to channel his "passion and drive" into stimulating outlets.

"It may be community service or it may be professional, but it will undoubtedly be productive and successful," said van Oppen.

Contemplating the Seattle wireless industry without Stanton's involvement is a bit difficult. He's had a hand in nearly every major wireless company in the past two decades, serving as chief operating officer at McCaw and then going on to co-found what became T-Mobile USA and Western Wireless.

Lucky for Seattle, Stanton didn't listen to the advice of van Oppen 26 years ago.

Van Oppen recalls a telephone conversation with Stanton in which he encouraged the young graduate of Harvard Business School to move to New York or Los Angeles because of a lack of opportunities in Seattle.

"He demonstrated his confidence and leadership ability early by completely ignoring my advice and playing a key role in founding a telecommunications industry in Seattle," joked van Oppen.

The time is past for starting cellular companies, Stanton said, because there's already been so much growth and consolidation there. But, he added, "I think there are tremendous opportunities for companies delivering services to carriers. Seattle has very talented entrepreneurs, pools of knowledgeable capital and great engineers."

Some opportunities, he said, include providing games, entertainment and information to cellular carriers for distribution to their subscribers, as Bellevue's InfoSpace Inc. does; retailing electronics, as Magnolia Hi-Fi and Cartoys do; and improving cellular handsets, he said.

And beyond that, "to be honest, there are things I haven't thought of," he said.

Stanton said he has no current plans to run for office.

"I've always had an interest in public service, and there are a lot of ways to do that," he said.

He will serve on the board of Alltel and continue serving as a director at Redmond data-storage company ADIC, and at Columbia Sportswear of Portland.

Whatever Stanton's next undertaking is, funding it could be helped by Stanton's take from the Western Wireless sale. Stanton and his wife own 12 million shares of Western Wireless, worth about $471 million under the deal at Friday's closing prices.

And they control 41 percent of the votes, helping ensure shareholders' approval of the deal.

Stanton and his wife also made a bundle when they sold VoiceStream Wireless to Deutsche Telekom. He got $94 million in cash and Deutsche Telekom shares then worth at least $619 million.

While he contemplates his future, Stanton promised that few of Western Wireless' 4,000 employees face layoffs. "The vast majority" will remain with the combined companies, Stanton said, while acknowledging that "there will clearly be some consolidation."

"Our call center in Issaquah will be completely unaffected. Our international-business headquarters in Bellevue will be completely unaffected," he said.

Alltel closed down $1.37, or 2.4 percent, at $54.75, holding steady after hours. Western Wireless closed up 85 cents, or 2.4 percent, at $37.37, climbing another 47 cents in after-hours trading.

Alltel Snags Western For $6 Billion

2005-01-10T11:07:00.000-08:00

By Sue Marek
January 10, 2005
http://www.wirelessweek.com/index.asp?layout=documentPrint&doc_id=1340002903

Last week's wireless rumor became this morning's completed deal. Alltel today announced it will buy Western Wireless in a stock-and-cash transaction valued at about $6 billion.

The deal will add another 1.4 million domestic customers to Alltel's network, bringing its total customer base to 10 million subscribers in 33 states and making Alltel the fifth largest U.S. operator. In addition, the company will gain about 1.6 million international customers from Western Wireless' overseas wireless ventures.

The terms of the deal are as follows: Each Western stock will be exchanged for .535 shares of Alltel common stock at $9.25 in cash. In aggregate, Alltel will issue about 60 million shares of stock and pay about $1 billion in cash. Alltel also will assume an estimated net debt of $1.5 billion. The deal is expected to close by mid-year.

The newly merged company's headquarters will remain in Little Rock, Ark., home of Alltel, and Western Wireless Chairman and CEO John Stanton will become a member of Alltel's board of directors. Alltel plans to keep all the members of Western Wireless' international team on staff and according to Scott Ford, president and CEO of Alltel, less than 10 percent of Western Wireless' existing domestic employee base of 4,000 will be affected by the merger. Most of the layoffs that occur likely will be in the corporate area where there is redundancy.

Once the deal closes, Western Wireless' 107 U.S. markets in 19 states will be converted to Alltel markets. Because both operators use CDMA technology for their wireless retail business, that isn't expected to cause any major network integration issues. Alltel also says it will continue to pursue Western's roaming strategy, which provides GSM and TDMA service to customers of its roaming partners. In fact, according to Ford, the newly merged company will continue to expand its CDMA footprint and may even expand the GSM roaming footprint into Alltel markets. "We are fully committed to maintaining the TDMA and GSM users and will expand where it makes sense," Ford said this morning in a call with members of the media.

Of course, the conversion of Western Wireless markets -- many of which use the Cellular One brand -- to Alltel will mean a significant reduction in the Cellular One brand footprint in the United States. Western owns the Cellular One brand and oversaw the other franchisees of the brand, including many smaller rural operators. According to Stanton, the ownership of the Cellular One brand was included in the Alltel transaction. "Western Wireless has a responsibility to the franchisees and we will live up to those responsibilities. We made sure in our contract that Alltel would accept that responsibility," Stanton says.

Verizon Wireless Launches VCAST

2005-01-07T13:32:00.000-08:00

By Rhonda Wickham
January 7, 2005
http://www.wirelessweek.com/index.asp?layout=print_page&doc_id=1340002883

LAS VEGAS - In an aggressive move, Verizon Wireless has set the bar by which other carriers will have to respond. It has established a pricing program aimed directly at the consumer segment interested in using EV-DO.

Beginning Feb. 1, Verizon Wireless will offer consumer services over its EV-DO network under the name VCAST. Priced at $15 per month, the company will offer services that fall into three basic silos: Video on Demand, Premier Services such as 3D gaming and Music on Demand.

As part of the new service, customers will be able to use new handsets to access video on-demand service, viewing current news, weather, sports and entertainment programming. They also will be able to download and play 3-dimensional games, watch music videos and short programs specifically designed for mobile phones and access other video applications.

Content sources include MTV Networks' VH1 and Comedy Central brands. Verizon also says a relationship with News Corp. and 20th Century Fox will deliver exclusive programs, such as '24: Conspiracy,' 'Sunset Hotel' and 'Love & Hate.' NBC will provide content as well, including newscasts made exclusively for mobile phones.

According to Jeffrey Nelson, Verizon Wireless spokesman, there is a definite 'cool' factor with this introduction, and he anticipates that consumers will embrace the EV-DO network capabilities.

At launch, customers will be able to access VCAST on three new phones from LG Mobile Phones, Samsung and UTStarcom Personal Communications. Verizon's featured phone is the new LG VX8000, which has full-motion video with audio downloading and playback capabilities. Customers can capture 15-second videos and still photos and send them to other Verizon Wireless customers with video messaging-capable phones or any e-mail address.

Initially, VCAST will launch in 30 cities, serving some 75 million subscribers. By midyear, the company intends to double the number.

Thus far, pricing for 3G services has been largely experimental to determine what the corporate market would bear. Busy executives have not been particularly picky about the pricing plans because they needed and appreciated high-speed access to get their e-mails and offices functions. To date, no carrier has developed simple data pricing plans aimed at the consumer segment.

Urge to Merge Could Hit Small Cellphone Companies

2005-01-07T11:09:00.000-08:00

January 7, 2005
By KEN BELSON
http://www.nytimes.com/2005/01/07/technology/07phone.html?pagewanted=print&position=

Merger mania may be coming to a town near you.

With some of the nation's biggest cellular phone companies having announced mergers in recent months, investors are now turning their attention to the smaller cellphone companies that dot rural and suburban America.

The news that Alltel, the largest of the regional wireless providers, is in negotiations to buy Western Wireless for about $4 billion further fueled speculation that the next round of consolidations will involve smaller carriers.

Shares of Western Wireless surged as much as 19.4 percent in trading yesterday, before finishing up $4.70 to close at $35.70. Alltel's shares slipped $2, or 3.4 percent, to $56. Shares in other smaller carriers, including U.S. Cellular, Rural Cellular and Dobson Communications rose significantly.

News of the impending deal between Alltel and Western Wireless, which was first reported in The New York Times yesterday, came after several weeks of heavy trading in shares of regional carriers, a sign that investors have been betting that more deals are on the way. The new investor interest makes sense.

Growth in the country's $100 billion wireless industry has slowed in recent years as the market moves closer to saturation. More than 61 percent of Americans now have cellphones, almost twice as many as in 2000. And the customers who have yet to get cellphones are costly to acquire in terms of marketing expenses and, worse, are likely to spend less on cellphone services.

Regional carriers, like the big national providers, are struggling with this problem. But they are also under other pressures. A main source of their revenue - roaming fees from the national carriers - is diminishing as the national companies pressure them to cut prices. At the same time, regional carriers must decide whether to invest what could amount to billions of dollars in third-generation cellular networks to remain compatible with the national carriers.

These forces will probably force smaller carriers like Western Wireless to seek deals. With 1.4 million subscribers, Western Wireless is too small, industry experts say, to weather on its own the forces buffeting the industry.

The regional wireless carriers are "between a rock and a hard place," said Mitch Mitchell, a consultant at A. T. Kearney. Western Wireless, he said, could be taking a "cost avoidance" strategy by selling itself rather spending more money to upgrade its networks.

Mr. Mitchell and others expect the number of deals between regional carriers to increase. And judging by the reaction to the news of Alltel, investors do, too.

The spotlight on the regional carriers comes less than a month after Sprint and Nextel said they would merge. After that deal, some investors and analysts thought that Verizon Wireless, the nation's second largest carrier, might buy Alltel to help it regain the top spot in the mobile industry.

But big players like Verizon are more focused on metropolitan areas, where consumers spend about $10 more per month on average than those in rural areas, and where their investments in equipment and advertising campaigns offer greater returns. Rather than build their own networks and chase new customers outside cities, Verizon, for example, appears content to rely on roaming agreements with regional carriers that let their subscribers piggyback cheaply on other companies' networks.

The other major players - Cingular, Sprint, Nextel and T-Mobile - are also unlikely to invest aggressively in the rural market. Cingular has its hands full absorbing AT&T Wireless, which it bought in October. Sprint and Nextel hope to begin merging their operations starting in the second half of this year. Given their different network technologies, their consolidation could run through 2007, if not longer.

"It might be cheaper to buy coverage than to build it in regional markets," said Edward Snyder, an industry analyst at Charter Equity Research in San Francisco. But, he said, "the big guys won't scoop up the small guys for another two years."

T-Mobile, meanwhile, appears more focused on courting and keeping young, urban customers and offering international services.

Regardless of what the national carriers do, many regional cellphone companies have been buoyed by the recovery in telecommunications stocks in the past two years. This has given potential buyers like Alltel the ability to go shopping and has encouraged companies like Western Wireless and its chairman and chief executive, John W. Stanton, to consider selling while share prices are high.

Even before the jump in its shares yesterday, Western Wireless's stock was trading at a three-year high.

Prices aside, one of the biggest hurdles in consolidations of rural wireless carriers is that many of them are closely held and, in some cases, majority-owned by families. Executives at these companies, including most notably U.S. Cellular, have strong attachments to their companies and often want to maintain control so they can pass them on to younger generations.

[M&A] Jamdat, Global Triad Make Buys

2005-01-06T11:43:00.000-08:00

Jamdat, Global Triad Make Buys
By Susan Rush
January 6, 2005
http://www.wirelessweek.com/index.asp?layout=newsat2direct&starting=7&pubdate=01/06/05

M&A: Jamdat deals for Downtown Wireless; Global Triad snaps up Wireless Broadband Access.

Looking to broaden its portfolio of casual games, Jamdat Mobile has purchased Downtown Wireless. Although terms of the deal were not disclosed, Downtown will contribute its Downtown Texas Hold 'Em game and other casino titles to Jamdat's offering. In late December, Jamdat launched JAMDAT Pool for mobile phones. The game is designed to enable wireless users to play various pool games, including classic 8- and 9-ball. The game is available from various wireless carriers, the wireless entertainment publisher says.

Global Triad plans to merge with Wireless Broadband Access, which currently has networks up and running in Detroit and Santa Cruz, Calif. Once the deal is complete, Wireless Broadband Access networks will become part of Global Triad's wireless network. The companies hope to complete the proposed merger by Jan 30. Terms were not disclosed.

Alltel Is Said to Be Suitor for Carrier in Northwest

2005-01-06T11:30:00.000-08:00

By ANDREW ROSS SORKIN and KEN BELSON
Published: January 6, 2005

Alltel, the nation's sixth-largest wireless carrier, is in advanced negotiations to buy Western Wireless, a regional carrier in the Northwest, for roughly $4 billion, executives close to the talks said last night.

The deal, which would be the latest in the rapidly shrinking wireless industry, could be reached within the next week, the executives said.

Combined, Alltel, which is based in Little Rock, Ark., and Western Wireless, based in Bellevue, Wash., would have about $10 billion in revenue and 9.8 million subscribers - about 6 percent of the national market. Alltel, which also has a fixed-line business, provides wireless service in parts of nearly two dozen states, mostly in the Southeast and Midwest; Western Wireless operates in 19 Western states, primarily under the Cellular One brand.

In addition to having complementary geographic footprints, the companies both use the same wireless technology, a standard called C.D.M.A.

The potential deal, as well as a surge in prominent mergers last year, reflects a renewed confidence among corporate executives, who have been buoyed by higher stock prices, a growing economy and low interest rates.

The talks between Alltel and Western Wireless could also signal a new phase in the $100 billion wireless industry as smaller regional carriers begin to consolidate. Among the major carriers, federal regulators are likely to resist any other potential mergers, assuming Sprint completes its planned acquisition of Nextel Communications.

The country still has dozens of smaller carriers, like Western Wireless, that serve specific regional markets, often quite profitably.

With the market in the United States rapidly reaching saturation, large carriers like Cingular Wireless and Verizon Wireless still want access to customers in rural areas without having to spend billions of dollars expanding their networks. To do that, national carriers have formed roaming agreements that allow their customers to use their phones cheaply when traveling outside metropolitan areas, and for local carriers to piggyback on the national carrier's network.

Verizon, for instance, has an extensive agreement with Alltel, the largest regional carrier with 8.4 million subscribers who can roam on Verizon's network at a discount.

Their relationship led to speculation that Verizon would eventually buy Alltel, particularly in the weeks since Sprint announced plans to merge with Nextel. If Verizon bought Alltel, it would leapfrog Cingular and become the biggest carrier again.

Now, however, it appears that rather than buy Alltel, Verizon is content to see Alltel become bigger and to allow its subscribers to use its expanded network.

"It's not clear how critical it is for Verizon to acquire customers in rural regions," said Tom Watts, an industry analyst at SG Cowen. "The roaming partners are already under constant pressure from Verizon to lower their rates. And there's less money spent in rural areas, so going rural doesn't seem to be the right strategy for Verizon."

While the talks between Alltel and Western Wireless are on track to be completed next week, the executives warned that several points were being negotiated, including the final price, and that it remained possible that the talks could collapse. As part of the transaction, Alltel would also assume about $2 billion of debt from Western Wireless.

Shares of Western Wireless have rallied in recent weeks, partly as a result of the news of Sprint's deal with Nextel. The shares have jumped almost 15 percent in the last month, ending yesterday at $31 a share.

If Western Wireless were taken over for $4 billion, as the executive estimated, that would mean that shareholders would receive $40 a share, a 29 percent premium to the closing price of the shares yesterday.

Even if it bought Western Wireless, Alltel would still be less than a quarter the size of Cingular, the market leader. But its strong balance sheet and an A debt rating means it can continue shopping for smaller wireless carriers, particularly if they operate in areas adjacent to Alltel's network.

"Reasonably priced, Alltel would certainly be interested in being a serial acquirer of smaller carriers," said Roger Entner, an industry analyst at the Yankee Group. "There is an opportunity for a Wal-Mart-like roll-up of the rural carriers."

A deal for Western Wireless would be a significant achievement for John W. Stanton, Western's chairman and chief executive. A major shareholder in Western Wireless, he is one of several pioneers who helped develop the cellular industry in the United States. In the 1980's, he helped McCaw Communications enter the cellphone business.

In 1988, he and his wife, Theresa Gillespie, formed Stanton Communications, which focused on cellular services as well as pagers and other wireless products. After several other stops, Mr. Stanton founded and was chairman of VoiceStream Wireless, which was sold to Deutsche Telekom in May 2001.

He was chairman of T-Mobile USA, the successor to VoiceStream, until 2003.

An Alltel spokesman, Andrew Moreau, had no comment. Mr. Stanton and a spokesman for Western Wireless were unavailable for comment.

Up next: Regional carrier consolidation?

2005-01-06T11:26:00.000-08:00

Alltel rumored to be in discussions to buy Western Wireless
Jan 6, 2005
http://www.rcrnews.com/news.cms?newsId=20952

The U.S. carrier market appears to be headed for further constriction on news that regional carrier Alltel Corp. is in advanced negotiations to buy Western Wireless Corp. for $4 billion. The report follows Cingular Wireless L.L.C.'s purchase of AT&T Wireless Services Inc. and Sprint Corp.'s recently announced plan to merge with Nextel Communications Inc.

Western Wireless' stock shot up 14 percent on the news to $35.34 per share. Alltel's stock dropped around 3 percent to about $56.08 per share.
continued below

According to a report in the New York Times, a deal could be reached within a week. Under the reported terms of the agreement, Western Wireless shareholders would get $40 per share, a premium over the carrier's trading levels prior to the announcement. However, Raymond James analyst Ric Prentiss said the price could go higher as a combination of cash and stock.

Alltel said it had no comment on the report.

A combined Alltel and Western Wireless would have around 9.7 million subscribers in parts of the Southeast, Midwest and West-solidifying Alltel's position as the largest of the nation's second-tier carriers.

The deal would give CDMA carrier Alltel a solid footing in the western United States, as well as access to Western Wireless' GSM operations. Aside from its own 8.4 million wireless customers, Alltel provides roaming services to other CDMA carriers, primarily Verizon Wireless. Western Wireless also offers roaming services to CDMA carriers, but around half of its network also includes GSM technology. T-Mobile USA Inc. is Western Wireless' primary GSM roaming partner. John Stanton, Western Wireless' chief executive officer, headed VoiceStream Wireless, which Deutsche Telecom purchased in 2001 and re-branded as T-Mobile. If Alltel purchases Western Wireless, it could diversify the carrier's potential roaming partners.

Alltel has recently been working to expand its network by purchasing network assets from the likes of U.S. Cellular and Cingular Wireless. Indeed, when Alltel purchased CenturyTel Inc.'s wireless business in 2001, the company said at the time it was looking to expand into the West.

Alltel has also been rumored to be considering U.S. Cellular, the second-largest tier-two carrier. A combination of Alltel, Western Wireless and U.S. Cellular would create the nation's fifth-largest carrier with about 15 million subscribers, just behind that of T-Mobile.

Alltel's reported discussions with Western Wireless fly against speculation that Verizon Wireless would purchase Alltel. Verizon, once the nation's largest carrier, has so far stayed above the consolidation commotion.

For the nine months ended Sept. 30, Western Wireless reported revenues of $1.4 billion and a net income of $107.9 million. During the same period, Alltel reported revenues of $6.11 billion and a net income of $756 million.

Western Wireless surges on Alltel speculation ($4 Billion)

2005-01-06T10:12:00.000-08:00

Western Wireless surges on Alltel speculation
Report says wireless carriers in talks for $4 billion deal
By Rex Crum, CBS.MarketWatch.com
Last Update: 1:12 PM ET Jan. 6, 2005
http://cbs.marketwatch.com/news/print_story.asp?print=1&guid={D0126B57-74A0-452D-8522-08BE741BE2BC}&siteid=google

SAN FRANCISCO (CBS.MW) -Western Wireless Corp. shares surged as much as 17 percent Thursday amid reports that the provider of wireless and broadband services is in talks to be acquired by larger rival Alltel Corp. for about $4 billion.

Western Wireless (WWCA: news, chart, profile), which sells most of its services under the CellularOne brand name, rose $4.34 to $35.34 in afternoon trading after the New York Times reported that the two companies could reach a deal within the week.

Spokesmen for both companies didn't immediately return calls for comment. At a price tag of $4 billion, Western Wireless shareholders would receive $40 a share, a 29 percent premium to the stock's close on Wednesday. The deal would include around $2 billion in debt assumption, according to the Times' report.

An acquisition of Western Wireless would give Little Rock, Ark.-based Alltel (AT: news, chart, profile) a much-larger presence in the western U.S. Bellevue, Wash.-based Western also has international operations that Alltel lacks.

Smaller wireless carriers are feeling pressure to consolidate after the acquisition of AT&T Wireless by Cingular, which is jointly owned by Bell South (BLS: news, chart, profile) and SBC Corp. (SBC: news, chart, profile), and the announced merger between Sprint (FON: news, chart, profile) and Nextel (NXTL: news, chart, profile) late last year.

The potential Alltel deal "could begin a new phase of (telecom) consolidation, particularly among smaller regional carriers," according to a research note written by Christopher King, a telecom analyst with Legg Mason.

Still a small player

Western Wireless has 1.2 million customers in 19 western states. Alltel which offers wireless, Internet and local telephone services in 26 states, has 13 million customers and $8 billion in annual revenue.

Combined, the companies would have about $10 billion in revenue and 9.8 million wireless subscribers, according to King. That would represent about 6 percent of the national market.

In addition to its U.S. footprint, Western Wireless has assets in countries in Europe, South America, Africa and the Caribbean. King estimates the value of those assets at $1.7 billion.

Christopher Larsen, of Prudential Equity Group, said that as Alltel has historically operated just in the U.S., he believes the company would likely sell off Western Wireless' overseas assets should the acquisition take place.

Alltel has an agreement with Verizon Communications (VZ: news, chart, profile) that allows Alltel customers to roam on the Verizon network at a discount. The report said Verizon, which had been speculated as a buyer of Alltel, is content to allow Alltel to expand on its own.

Alltel shares gave up $2, or 3.5 percent, to trade at $56.

Alltel in talks for Western Wireless for $4 bln -report (AYZ, WWCA)

2005-01-06T04:38:00.000-08:00

4:38am 01/06/05
By Emily Church

LONDON (CBS.MW) --

Wireless carrier Alltel (AYZ) is in advanced talks to buy Western Wireless Corp. (WWCA) in a deal valued at around $4 billion, including the assumption of $2 billion in debt, the New York Times reported, citing sources. At $4 billion, Western Wireless shareholders would receive $40 a share, a 29 percent premium to the stock's close on Wednesday. Combined, the companies would have about $10 billion in revenue and 9.8 million subscribers, representing about 6 percent of the national market, the report said.

Novatel Wireless Soars On Reaffirmed Guidance

2005-01-05T11:06:00.000-08:00

By Susan Rush
January 5, 2005
http://www.wirelessweek.com/index.asp?layout=print_page&doc_id=1340002812

Shares of Novatel Wireless were up 7.5 percent during mid-morning trading action following news that the wireless broadband access solutions provider was sticking to its fourth-quarter and full-year 2004 guidance.

Novatel says it is on target to meet its projections of earning 17 cents per share on revenue of $33 million to $34 million in the fourth quarter, which is in line with analysts' on average expectations. The company also reiterated its guidance calling for annual revenue to come in between $103 million and $104 million.

The wireless networking equipment provider attributed its expected performance to "strong shipments across all technologies." In December, Novatel began shipping its new line of 3G products. Looking ahead, the company expects new customers to play an integral role in its growth for 2005.

Yesterday, Novatel announced it had begun shipping its Merlin U630 Wireless PC Card Modem, a next-generation 3G UMTS quad-band PC Card modem that provides high-speed wireless broadband access on the UMTS 2100 MHz band in Asia, Europe and the Middle East, as well as global Internet connectivity on any GPRS or GSM network on 900, 1800 and 1900 MHz frequencies.

At one point, Novatel shares were up $1.21 to $17.41 on volume of 2.1 million. Average daily volume for Novatel shares is 1.5 million. Novatel is slated to release its fourth- quarter and full-year results after the market closes on Feb. 10.

Erika Brown On Venture Capital (VC Going Global)

2005-01-05T04:00:00.000-08:00

Sneak Peek 2005
Erika Brown On Venture Capital
01.11.05, 7:00 AM ET
http://www.forbes.com/2004/12/19/sp05_08_ebrown__print.html

Money, money, money! Last year, we said venture capitalists were going to raise new funds in droves, and we were right. In 2005, this trend will be twice as big. In 2004, U.S.-based VCs raised $10.3 billion, not counting the fourth quarter, which is expected to be as busy as the three prior quarters combined. But, VCs and limited partners, the individuals or groups who invest in VC funds, are all squawking about more money--and bigger funds--in 2005. That $75 billion overhang is going to explode. And, you know that will mean a spike in deal valuations. Great news for entrepreneurs, but terrible news for their backers.

The Unconventional Wisdom
The biggest trend to hit venture since the Internet: Going global. The old tenet of not investing in a startup that is more than a half-hour drive away has become obsolete. VCs and their entrepreneurs are racking up frequent flier miles with trips to Australia, China, India and Eastern Europe. Perhaps more interestingly, the U.S. is only a final pit stop on the race to big sales. Broadband and video game outfits are running to Korea, while mobile phone service and equipment companies are hitting China, India and Singapore. Consumer electronics are hot all over Asia and Europe.

The Misplaced Assumption
The media blabbed all year about how Google (nasdaq: GOOG - news - people ) will usher in a new wave of IPOs. Not so. Granted, the IPO market is better than it's been in the last few years, but only companies with at least five quarters of profitability, and a proven management team, will get the top bankers on board. The more likely exit: acquisitions. Big boys, such as Hewlett-Packard (nyse: HPQ - news - people ), Cisco Systems (nasdaq: CSCO - news - people ), IBM (nyse: IBM - news - people ) and Oracle (nasdaq: ORCL - news - people ), have cash, and are looking to juice up their product lines. But, don't expect a fire sale just yet. To be considered for an IPO, target companies must have working products, happy customers, a healthy cash flow and a clean bottom line.

The Watch List
Keep an eye on any VC firms with partners in Hong Kong, South Korea, Tokyo, Jerusalem, Tel Aviv or Bangalore. If a firm has moved someone from the U.S. in order to set up shop abroad, it's quite possible things might not work out. Asia operates like Silicon Valley in that it's all about who you know, and cracking open the Yellow Pages will not get a deal done. The following firms get high grades for having more than just a foot in the door: Benchmark Capital, DCM-Doll Capital Management, Jerusalem Venture Partners, NEA, Norwest Venture Partners, Walden VC, Warburg Pincus and Worldview Technology Partners.

The Bold Prediction
Three bubbles: Micro bubbles--a result of the influx of capital into venture funds, which will spur VCs into competing for deals. This, in turn, will boost valuations and encourage dozens of me-too startups. Internet two bubbles--as in the '90s, Application Services Provider returns as On Demand Software, and successful IPOs from Salesforce, Motive and RightNow will cause a slew of entrepreneurs to follow suit. And, finally, a Nano bubble--firms that don't even do micro-technology are calling themselves nano-something or other. But be forewarned, it's just another buzzword to lure excitable investors.

Samsung wins $800M EV-DO contract with KDDI

2005-01-04T11:26:00.000-08:00

Jan 4, 2005
http://www.rcrnews.com/news.cms?newsId=20927

SEOUL, South Korea-Samsung Electronics Co. Ltd. has won an $800 million contract for CDMA2000 EV-DO equipment with Japanese carrier KDDI Corp., according to international press reports.

The firm will supply equipment, along with installation and technology support beginning in March 2006, the reports said.

InPhonic Lands AT&T Contract

2005-01-04T11:14:00.000-08:00

By Susan Rush
January 4, 2005
http://www.wirelessweek.com/index.asp?layout=newsat2direct&starting=1&pubdate=01/04/05

AT&T is moving forward with its mobile virtual network operator (MVNO) plans and has turned to InPhonic to help turn it into a reality. Terms of the 2-year deal were not disclosed.

AT&T plans to launch wireless voice and data services during the first half of this year. As previously announced, the telecom company is partnering with Sprint to enable the delivery of wireless services from AT&T. AT&T is now calling on InPhonic to deliver its subscriber management systems.

"We are building the backend operation to building the MVNO," says David Steinberg, InPhonic's CEO. The company's platform will provide for procurement, activation, billing and customer care, as well as self-service platforms. AT&T also plans to leverage InPhonic to enable over-the-air activation, mobile Web and advanced wireless messaging.

"We believe AT&T's go-to-market strategy, which is to create a business-focused MVNO, will be a winning concept," Steinberg says.

To Steinberg's knowledge, InPhonic's deal with AT&T represents the largest mobile virtual network enablement (MVNE) contract given out. "The fact that AT&T decided to partner with InPhonic speaks volumes to our capabilities," he says.

InPhonic has been busy as of late. The company recently announced plans to acquire A1 Wireless in a move designed to expand its presence on the Internet. In mid-December, InPhonic was selected by RadioShack to operate and manage RadioShack's online wireless store, which will enable customers to research and buy mobile handsets and service plans through the Internet. In November, the company netted $108.9 million in an initial public offering.

Steinberg sees a bright future ahead for InPhonic. "We are taking the IPO capital that we have built up, including the excitement from it, and we are leveraging that to create a great company," he says.

InPhonic will continue to grow its wireless activation on the Internet portion of its business, as well as its own MVNO Liberty Wireless. Steinberg, however, expects MVNO and MVNE will be the company's fastest growing business category. To that end, InPhonic has named Frank Bennett president of its MVNO services group. Bennett most recently served as InPhonic's COO.

Motorola targets snowboarders with phone-friendly clothing

2005-01-04T10:59:00.000-08:00

By Mike Dano
Jan 4, 2005
http://www.rcrnews.com/news.cms?newsId=20920

Motorola Inc. announced it is working with snowboard company Burton to develop mobile-phone-friendly jackets, hats and helmets for snowboarders, a move aimed at garnering acclaim among younger wireless users.

The products, scheduled for release later this year, will feature sewn-in speakers and microphones so that snowboarders can answer calls without digging in their pockets for their mobile phones. For example, the prototype jacket features a pocket for a Bluetooth-capable mobile phone, which will then transmit calls to Bluetooth-capable speakers sewn into the jacket's hood. Users will be able to manage calls using a Bluetooth-capable control panel sewn into the jacket's sleeve.

Motorola's teaming with Burton follows its previously announced partnership with Apple Corp. for the company's hip iTunes digital music service. Although Motorola has not yet released any devices that can access iTunes, rumors have been spreading about an upcoming launch. Motorola and Apple have remained tight lipped on the subject.

In other fashion news on the wireless front, Hypergear Inc. released its new "2005 collection" of mobile-phone carrying bags. The stylized Kangaroo-branded phone purses come in a variety of colors and designs for the trend-conscious mobile-phone user. Hypergear said it will show off the new collection at the Consumer Electronics Show in Las Vegas this week.

CSL selects Merlin U530 Wireless 3G PC card

2005-01-03T13:00:00.000-08:00

January 3, 2005
http://www.3gnewsroom.com/3g_news/jan_05/news_5353.shtml

Novatel Wireless, Lucent Technologies and CSL announced the launch of the Merlin U530 Wireless PC Card Modem, jointly developed by Lucent Technologies and Novatel Wireless.

At speeds of up to 384 kilobits per second, the Merlin U530 provides CSL business and consumer customers with secure high-speed wireless access to email, the Internet, data intensive attachments, multi-media applications and corporate networks. Mobile users can increase productivity by wirelessly connecting from any location within CSL's 3G network. The company is one of four operators in Hong Kong with a 3G license.

"CSL is providing its customers true mobility with the launch of the Merlin U530 UMTS 3G PC Card supplied by Lucent Technologies and Novatel Wireless," said Mike Robey, chief operating officer at Hong Kong CSL. "The Merlin U530 enables CSL to offer business customers streaming services, secure mobile access to corporate networks and other information stored behind corporate firewalls. Connected to CSL's high quality 3G network, mobile users are able to access information, stay connected to partners and clients and remain productive when out of the office, providing a critical competitive advantage."

"With this agreement, Lucent enhanced CSL's 3G UMTS service offerings by supplying CSL's 3G customers with the most convenient way to work away from the office," said Roger Derrien, vice president for UMTS product management at Lucent Technologies.

Lucent and Novatel Wireless' Merlin UMTS PC cards are available from 14 operators in 17 countries throughout Asia, Europe, Middle East and North America.

Cable Companies Dish Data

2005-01-03T12:00:00.000-08:00

David M. Ewalt, 01.03.05, 3:00 PM ET
http://www.forbes.com/2005/01/03/cx_de_0104cable_print.html

The future of the cable TV business has more to do with ones and zeros than sitcoms and commercials.

Data is where the dollars are now. Cable companies are increasingly relying on data to buoy their bottom lines and promote future growth, exploiting their existing connections into homes to deliver Internet access, on-demand television and voice-over-Internet-Protocol (VoIP). These high-margin services are breathing new life into the business, as well as helping push the development of new cutting-edge services.

Cable operators traditionally focused most on providing access to broadcast TV. But high programming costs are squeezing margins, and that segment of the business is less and less profitable.

But fortunately for the cable companies, they have the networks of wires they laid starting in the 1970s. The coaxial cable used to carry television has the potential to carry large amounts of data, and already reaches into millions of homes, so cable operators can push new services down the wires relatively cheaply and easily. "The heavy lifting for cable is already done," says Tuna Amobi, Standard & Poor's senior cable and satellite analyst.

It's a high-margin business, and consumers are gobbling it up. The U.S. cable industry now has 25 million digital cable customers, 20 million high-speed Internet customers and 3 million telephone customers, according to the National Cable and Telecommunications Association (NCTA). According to media business analysis firm Kagan Research, in ten years those kinds of advanced data services will contribute 40% of cable's residential revenue, helping the industry more than double overall revenue to $138 billion for 2014 from $60 billion for 2004.

Data services are already proving their benefit to the bottom line. The largest U.S. cable company, Comcast (nasdaq: CMCSA - news - people ), saw revenue jump 12.1% in its third quarter, while number three Cox Communications (nyse: COX - news - people ) posted an 11% gain.

The growth rate for high-speed Internet is particularly strong. Comcast added a record number of new Internet users in its third quarter, leading to a 40% increase in broadband revenues. Cox also added a record number of users in the quarter, posting subscriber growth of 32% year over year.

"We see nothing but acceleration now," says Steve Gorman, Cox's vice president of product marketing and management for high-speed Internet. "There's still a significant portion of people out there without broadband. Eighty-five percent of our connects each month come from the dial-up world, and 8% to 10% of people are new to the Internet entirely." Cox, like many of its competitors, currently offers three tiers of Internet access, each with faster connections for a slightly higher price.

New services that change the experience of watching television are also increasingly popular. Digital cable offers customers far more channels to watch than standard cable--typically in the hundreds-- and gives them an interactive on-screen program schedule. Today more than a third of U.S. cable customers subscribe to this product. Its sister service, called "on demand," allows users to order programming whenever they want, using on-screen menus to select a program that they can start, stop, pause, rewind and fast forward at will.

Digital video recorders--the cable industry's answer to TiVo (nasdaq: TIVO - news - people )--allow users to record programs on a hard drive inside the cable box, as well as to pause or rewind live TV. Number two operator Time Warner (nyse: TWX - news - people ) has already rolled the service out in all of its top 31 divisions and has over 700,000 DVR customers, while number four Charter Communications (nasdaq: CHTR - news - people ) saw DVR subscriptions jump to 61,000 from 24,000 between the second and third quarters of this year.

Emerging data services like VoIP, in which a user plugs a phone handset into a special cable modem to make calls, are also starting to catch on. While still only available in limited markets--only Cablevision (nyse: CVC - news - people ) has service available across its entire network--voice services are booming. According to the NCTA, the cable VoIP subscriber base added 228,000 users from the second to third quarters of this year, a 161% jump. By the end of the year, there should be more than 450,000 subscribers. Amobi says he expects voice to become a major, high-margin growth area in the medium-to-long term.

Other new data services are also on the way. Time Warner (nyse: TWX - news - people ) is working on a service called "Start Over" that will allow digital cable subscribers to press a button and restart any program already underway from its beginning. A number of operators are also working on integrated voice-mail/e-mail inboxes, which you could access from your computer or TV.

Even sci-fi fantasies like videophones are becoming reality. Cox's Gorman says with data and voice communications already going into a home, it's a natural progression to interactive video. Customers could buy a cheap digital video camera, plug it into their cable box, and engage in videoconferences using their TV. "It is indeed on the timeline," he says. "There will be the day where if a call comes in, you'll see the number on the television, and you may want to take it there, or you may transfer it to your phone."

Bells dig in to dominate high-speed Internet realm

2005-01-03T07:47:00.000-08:00

By Leslie Cauley, USA TODAY
http://www.usatoday.com/money/industries/technology/2005-01-03-fiber-cover_x.htm

To hear BellSouth talk, high-speed fiber lines are the way of the future. So why is it so determined to stop Lafayette, La., a rural community in the heart of Cajun country, from installing its own fiber?

Vinnie Sinatra lays fiber optic cable in Buffalo Grove, Ill., in October.
By Jeff Roberson, AP

Joey Durel, Lafayette's mayor, has been asking himself that same question. His city plans to build an advanced broadband network to offer voice, data and video to its 116,000 residents. But local officials claim BellSouth is trying to kill the project. And they say it's getting help from Cox, the local cable-TV operator.

"We have the opportunity to do something great for this community — and in a state that needs a big win," Durel fumes. "They have to get out of our way."

It's the dark side of the fiber story.

The regional Bell companies have made much of their billion-dollar plans to run broadband networks across the USA. Yet they're also quietly trying to erect hurdles that would make it hard — or expensive — for anyone to compete with them.

Besides municipalities like Lafayette, the Bells are going after their phone rivals, Internet carriers and major metro areas — anyone with an interest in building services that might compete with the Bells.

Critics say the Bells' efforts are an attack on competition and that consumers could be the big losers.

"If municipal governments and others are blocked from entering this market, the vast majority of Americans are going to wind up on the wrong side of the digital divide, because they will be unable to afford high-speed services," says Gene Kimmelman of Consumers Union.

Atlanta-based BellSouth disagrees. Bill McCloskey, a company spokesman, argues there are no barriers to entry into the broadband business, as evidenced by the army of carriers — cable, wireless, local governments and others — that are trying to compete.

"For anybody to say that there is no competition just doesn't compute," McCloskey says.

Broadband rates in the USA are already among the highest in the world — $35 to $40 a month. And that's for relatively slow speeds of 1 to 2 megabits a second. In Japan, consumers pay about $15 a month for speeds of 30 megabits or better, notes Raul Katz, CEO of Adventis, a Boston-based consultancy.

The Bells have proved adept at using their fiber plans to persuade regulators to grant them concessions. Without those concessions, the Bells have warned, they wouldn't make their huge fiber investments. The implied threat: that the USA, which ranks a lowly 13th in overall broadband deployment, would slip further.

"Fiber is the pawn that allows them to extract concessions," Katz says.

Regulators aren't the only ones buckling. Consider Pennsylvania

Pennsylvania had considered legislation, backed by Verizon, to bar its cities from selling broadband services. After a series of compromises, Gov. Edward Rendell signed a bill in December letting Philadelphia and other cities proceed with their own broadband plans — until 2006. After that, they must give Verizon a first right of refusal.

Verizon says the bill is fair, especially considering that Pennsylvania is requiring phone providers to offer broadband statewide by 2015.

What's more, the Bells say, their local-phone turf is under attack from rivals, forcing them into combat mode. They also note that wireless is becoming a substitute for traditional "wired" phones, thus putting more pressure on the Bells.

Well, yes and no.

The Bells themselves own two of the three biggest wireless companies in the USA. That alone makes them a far-reaching presence in many consumers' lives.

Cingular, the No. 1 player, is owned by two Bell companies, SBC Communications and BellSouth. The No. 2 wireless carrier, Verizon Wireless, is also controlled by a Bell company, Verizon.

Consumers could pay price

Experts say they worry about diminished competition in broadband services. Unless others can step into the fray and compete aggressively, broadband could fall under the control of just two players, just as the cell phone business did for years. With just two cell phone carriers per market, operators tended to keep prices high.

The same could occur in broadband, warns Mark Cooper, research chief at the Consumer Federation of America. "Two is not enough for real competition," he says.

Cooper notes that the U.S. cell phone business, which was a legal duopoly for years, turned competitive only when the Federal Communications Commission chose to grant up to eight licenses per market. The entry of six hungry players caused cell phone prices to plummet — a boon for consumers.

Since 2000, though, the wireless business has consolidated. Once Sprint and Nextel complete their merger, there will be just three major wireless carriers.

"It's just too easy for two or three players to figure out how to avoid lowering prices," Cooper says.

Kimmelman agrees. The way things are going on the regulatory front, he says, "consumers are going to end up paying inflated prices for high-speed Internet access, which is becoming essential for day-to-day life in America."

The future of Internet-based phone service, known as VoIP, is also at risk, he says. In its final path to a home, VoIP travels over high-speed lines — a cable-TV or phone line. If access to that line is blocked, Kimmelman warns, development of the service could stall.

Kimmelman says the situation is now especially urgent, with AT&T and MCI retreating from the residential phone business.

"With AT&T and MCI exiting the consumer market, the only way consumers are going to get real competition is through VoIP," he says.

The big Bells are taking advantage of that retreat by plowing ahead with their fiber deployments. Their plans vary. Only Verizon vows to extend fiber lines all the way to homes. Its customers could see top speeds of 100 megabits or more.

SBC plans to take fiber only to the overall neighborhood, with speeds of up to 25 megabits a second. BellSouth has committed to take fiber only to the "curb" — 500 feet or less from the home. Its speeds would top out at 24 megabits a second.

The connection speeds for SBC and BellSouth are so much slower, in part, because of the hybrid fiber-copper nature of their broadband pipes. Copper doesn't have nearly the horsepower of fiber. That's one reason Verizon has chosen to plunge ahead and build a 100% fiber network directly to homes.

Just a few years ago, the Bells had pledged to run fiber straight to homes. In return, they wanted the FCC to rule that they didn't have to lease their fiber to rivals who could then turn around and use it to deliver competing services.

Their request went to the heart of U.S. telecom policy. That policy has long been based on the notion that the Bells were obliged to share their networks with all comers.

The rationale owed to the history of the Bells. Their networks were built over the course of a century using monopoly ratepayer money. Like the U.S. highways, the Bell networks have been regarded as a unique infrastructure that had to be open to others on terms that were fair.

But in 2004, in a nod to the changing nature of telecom, the FCC granted the Bells' request. That concession paved the way for the Bells to deploy fiber to homes.

That's when the foot-dragging began.

Instead of taking fiber to the home, BellSouth asked if it was OK to just take fiber to the neighborhood, relying on its existing copper for the final run from the curb to the house. But it still wanted to be free of the sharing obligation.

The FCC said OK. The agency noted that the Bells didn't need to let rivals use any line that wasn't set up for traditional phone service.

That led SBC to up the ante. Its argument: If it was OK to take fiber just to the neighborhood and not share it, then surely it was OK to take it just to the "node" and not share. (The node is the stretch of copper between a central switching office and a home or business.)

So long as fiber exists in some part of the network between the node and house, SBC thinks it should be treated, from a regulatory view, as though it were running fiber all the way to homes. And it doesn't think it needs the FCC's approval.

Meantime, all the Bells are pushing for a raft of regulatory concessions that would make life difficult for would-be rivals. Dave Baker, a vice president at EarthLink, an Internet service provider, says the trend is inherently bad for competition — and for consumers.

"By splicing in a little fiber, the Bells can squelch competition," Baker says. "There can be and should be competition in broadband services on new networks."

Little Lafayette's a threat

For the Bells, the motive is clear: money. They've committed billions to deploy high-speed fiber lines across the USA. Their huge investments are predicated on the assumption that they'll have plenty of customers available to buy their high-speed services.

That's why efforts like the one in Lafayette are threatening. If too many communities peel off and build their own high-speed networks, there could be fewer customers for the Bells.

Lafayette, population 116,000, is a pittance for BellSouth. The carrier has 22 million local access lines in nine Southern states, including Louisiana. But if enough cities followed Lafayette's lead, BellSouth could lose more business.

Jim Baller, a lawyer who often represents municipalities in fights with the Bells, says he understands the Bells' predicament — to a point.

"I sympathize that there is not enough money for them to go all the way to the home everywhere at the same time," Baller says. "I just wish they would get out of the way of folks who want to do it and can step up to the plate."

Lafayette happens to have a staunch supporter: Louisiana's governor. Kathleen Babineaux Blanco, elected in November, has signed a law that lets municipalities build their own broadband networks. Phone and cable operators opposed it.

Sam Jones, Blanco's local government liaison, says the state's goal is to keep broadband affordable. With more competitors, Jones says, "You allow consumers to get the best price and the best products."

BellSouth, meantime, is working all the angles.

It told local regulators in Lafayette that they should use the FCC's "Part 64" accounting rules, which have long been imposed on local phone companies, as a benchmark to set rules for the city. Lafayette countered that those rules would be an unnecessary burden.

Yet within days of making that argument last fall, BellSouth turned around andasked the FCC to relieve it of the Part 64 rules for its broadband services. It complained that the rules were onerous and outdated and force carriers to keep "extensive and tedious" records.

BellSouth insists it's just trying to look out for the interests of the local Lafayette taxpayers. Its argument hinges on the fact that the city-owned utility, which is building the network, is a monopoly.

"We're just saying that the local utility ratepayers should not be cross-subsidizing this new business that they want to get into," says McCloskey, the BellSouth spokesman. "They are a monopoly, and they should be regulated like one."

And BellSouth?

According to McCloskey, BellSouth "is no longer a monopoly," which is why it's asked the FCC for relief from Part 64 rules.

"We're a different kind of animal," he says.

Terry Huval, director of the Lafayette Utilities System, thinks BellSouth's real goal is to kill the project. "Their end-game is to frustrate us so much that we back away from this project," he says. Huval adds, "There won't be any cross-subsidies" because the city plans to use revenue from its new broadband services to finance the entire cost of the project.

Lobbying by BellSouth and Cox has forced the city to spend $400,000 defending itself, Huval says. "They go around telling people we're spending too much, even though they're the cause of a lot of that," he fumes.

Mayor Durel says the city isn't backing down.

"This is much bigger than Lafayette," Durel says. "This is about economic development for us. This is about future-proofing our city."

Top Ten 2004 Network Deals

2004-12-30T14:44:00.000-08:00

Top Ten 2004 Network Deals
12.30.04
http://www.unstrung.com/document.asp?doc_id=65222

2004 proved to be a turnaround year for the wireless industry following the turbulence of recent times. As confidence returned, carriers could at last be seen putting pen to paper and finalizing network upgrade contracts in an effort to secure future customer revenue.

Listed below is Unstrung’s pick of the bunch. This is not designed to be a breakdown of the biggest deals in terms of revenue, but instead aims to highlight those contracts that have helped shape the wireless industry this year.

10: Kodiak Snaps Up Orange

Californian startup Kodiak Networks kicked off the new year in style, casually sweeping aside big-name cellular network vendors to secure a high-profile deal with Orange Communications SA for the European launch of its Push-to-Talk (PTT) services (see Orange Pushes Startup).

The win was Kodiak’s first ever customer announcement, beating off more established PTT equipment rivals Ericsson AB (Nasdaq: ERICY - message board), Motorola Inc. (NYSE: MOT - message board), and Nokia Corp. (NYSE: NOK - message board). Orange has a worldwide customer base of approximately 50 million.

Further PTT deals soon followed for the market newcomer (see Kodiak Pushes in Kentucky, Kodiak Pushes Bluegrass Cellular, and Cellcom Deploys Kodiak).

9: P-Cube Exits on a High Note

In May Unstrung revealed that data services platform startup P-Cube had struck a high-profile win at BellSouth Corp.'s (NYSE: BLS - message board) Latin American subsidiaries (see P-Cube Salsas With BellSouth).

The contract not only gave the startup a serious edge over rivals Megisto Systems Inc. and ProQuent Systems Corp., but also marked the last time P-Cube hit the headlines as an independent business.

Clearly impressed with the startup’s three major wireless carrier deals, Cisco Systems Inc. (Nasdaq: CSCO - message board) later swallowed the newcomer in a $200 million acquisition (see Cisco Plucks P-Cube for $200M).

8: Ericsson Builds CDMA Share

Not one deal in particular, but rather a succession of contract wins have seen Swedish vendor Ericsson creep up on its 15 percent target share of the CDMA (Code Division Multiple Access) infrastructure market (see Ericsson Nears CDMA Target and Ericsson Eats Into CDMA).

Traditionally associated with the GSM (Global System for Mobile communications) and Wideband-CDMA markets, the vendor has made public its intention to battle Lucent Technologies Inc. (NYSE: LU - message board), Motorola, and Nortel Networks Ltd. (NYSE/Toronto: NT - message board) in the rival CDMA business. Although such ambitions were initially dismissed by analysts, recent CDMA wins suggests the company is on track to achieve its goal (see Ericsson Wins Extra China Deal, Ericsson Expands TTSL and Ericsson Doubles Up in China).

7) Indian Deal Curries Favor

Nokia and Nortel were the recipients of an $862 million deal at Indian GSM carrier Bharat Sanchar Nigam Ltd. (BSNL) in August (see BSNL Splits GSM Deal).

Not only was the contract of serious financial value, the deal also strengthened India’s standing as one of the fastest growing wireless markets. Lehman Brothers expects the Indian region to reach 50 million subscribers by the end of this year and 100 million by 2006.

Are you listening, vendors?

6: HSDPA Kicks Into Europe

Twelve months ago HSDPA (High-Speed Downlink Packet Access) had been written off by many as an unnecessary technology. A software upgrade to W-CDMA networks intended to crank up data rates to a theoretical 10 Mbit/s, it seemed unlikely that carriers would deploy the technology in the near future.

Then came a joint announcement from mmO2 plc and Lucent in December, stating that a small commercial HSDPA deployment was to be set up on the Isle of Man, a tiny island off the west coast of Britain. The really big news, however, was that the carrier plans to follow this project with larger launches in Ireland, Germany, and the U.K. (see MMO2 Preps for HSDPA).

No decision on a network supplier for these larger launches has yet been announced, but Lucent, Nokia, and Nortel are the clear favorites.

5: Lucent Finally Wins Big W-CDMA Deal

Until December this year Lucent Technologies was a laggard in the 3G W-CDMA equipment market. With only two piddly European contracts under its belt, the company was widely criticized for a lack of major wins, a huge contrast to its CDMA market dominance and past success in the GSM space.

Then came the massive Cingular Wireless deal, estimated to be “30-35%” of a planned $1.5 billion spend over the next two years (see Cingular Confirms 3G Trio). The win looks set to legitimize Lucent’s W-CDMA business, and is rumored to be the catalyst for a future $500 million network consolidation services deal with the carrier (see Lucent Linked to Cingular Deal).

4: Huawei Steals 3G March

Earlier this month Chinese network vendor Huawei Technologies Co. Ltd. gave its Western rivals major cause for concern, announcing a surprise 3G win at Dutch carrier Telfort B.V. (see Huawei Wins in West). The deal was a massive achievement in light of Ericsson’s status as Telfort’s current GSM network supplier.

Rumored to be worth between €200 million (US$265 million) and €400 million ($530 million), the deal marks the first time a Chinese vendor has won a W-CDMA deal in Europe. Expect more to follow, especially with the likes of UTStarcom Inc. (Nasdaq: UTSI - message board) and ZTE Corp. (Shenzhen: 000063 - message board; Hong Kong: 0763) also making headway in the region (see UTStarcom Makes Euro Headway).

3: EV-DO Hits Europe

Twelve months ago it was difficult to imagine any non GSM-based technology gaining attention in Europe. How things change.

Carrier interest in the European rollout of CDMA450 is now at an all-time high, with Germany, Portugal, Norway, Sweden, and a bevy of Eastern European countries all expressing commitment to the technology (see CDMA 450 Seeps Into Europe).

Things really hit a peak in August with Czech carrier Eurotel Praha spol. s.r.o.’s launch of a third-generation CDMA2000 1x EV-DO (Evolution, Data Only) network using the 450MHz spectrum band (see EV-DO Hits Europe). The souped-up network offers data speeds of between 300 and 500 kbit/s. As well as being Europe’s first EV-DO launch, the network also marks the first time EV-DO services have been available anywhere in the 450MHz band.

Nortel was the chosen network supplier (see Eurotel Picks Nortel).

2: Sprint EV-DOes It

Sprint Corp. (NYSE: FON - message board) in June announced it was to launch a $1 billion EV-DO network, music to the ears of network suppliers Lucent, Motorola, and Nortel (see Sprint Confirms EV-DO Network and Sprint Invests in EV-DO).

When the carrier later announced its $35 billion mega merger deal with Nextel Communications Inc. (Nasdaq: NXTL - message board), it became clear that Nextel’s 15.3 million subscribers would also be moved across to Sprint’s EV-DO network (see Deal Solves Nextel 3G Dilemma).

The move was a major blow to infrastructure startup Flarion Technologies, which was hopeful of securing its first big-name commercial deal, potentially worth up to $3 billion. Nextel had previously revealed it was mulling over two standards as its own long-term technology of choice: Flarion's proprietary Flash Orthogonal Frequency Division Multiplexing (OFDM) and industry standard CDMA 1xEV-DO (see Deal Solves Nextel 3G Dilemma and Nextel Eyes $1B Network Saving).

1: Lucent Scores $5 Billion Payday

U.S. carriers have certainly been good to Lucent this year. Back in July the vendor secured a monster deal worth “at least $5 billion” with Verizon Wireless for the upgrade of the carrier’s national voice and data network (see Lucent Scores $5B Verizon Deal).

The deal included the $525 million contract Verizon awarded to Lucent in March for the deployment of its EV-DO network (see Verizon Repeats on 3G).

Of course, a $5 billion payday is massive news for any vendor, but analysts argued the win was doubly so for Lucent.

“Compared to the first $5 billion contract signed in March 2001, Lucent’s total revenues have declined by approximately two thirds, and thus this contract is much more meaningful,” wrote Lehman Brothers’ Steve Levy.

“This contract looks to cover a more comprehensive set of products and services than the original contract did… Given the lowering of all carrier capex spending, and the likelihood that Verizon could spend the full amount in much less than the six years, and the use of the term ‘at least,’ we see this as a big positive for Lucent.”

— Justin Springham, Senior Editor, Europe, Unstrung

Calling All Advertisers

2004-12-30T11:37:00.000-08:00

Penelope Patsuris, 12.17.04, 2:47 PM ET
http://www.forbes.com/2004/12/17/cx_pp_1216mobiletv.html?partner=telecom_newsletter

NEW YORK - Think you'd never ask for an ad? You might.

The producers of the hit TV series 24, which airs on Fox Entertainment Group's (nyse: FOX - news - people ) Fox Broadcasting network, are creating short, promotional videos that will be broadcast to cell phone customers who sign up to receive them. The free, one-minute videos won't be clips from the existing show but rather mini-dramas based on the series, using different actors.

They'll first be made available via Vodafone's (nyse: VOD - news - people ) U.K. wireless service in January, coinciding with the launch of 24's fourth season. In the U.S., Fox parent News Corp. (nyse: NWS - news - people ) has a deal with Verizon Wireless, partly owned by Vodafone, to make the videos available to customers using its new 3G high-speed service, which should be available in the first half of next year. These kinds of promotional streaming videos are expected to start popping up on cell phones all over the U.S. in 2005, as providers like Cingular, the BellSouth (nyse: BLS - news - people )-SBC Communications (nyse: SBC - news - people ) joint venture, also roll out 3G services.

Welcome to the latest marriage of entertainment and marketing. These mobile episodes, or "mobisodes" as they've been dubbed, will serve an astonishing array of functions in 60 seconds: They will entertain, promote a TV series and pitch 3G services, as well as the fancy phones we need to use them.

Marketers are betting that if the content is short, entertaining and, of course, free, consumers will sign up for videos like 24. They point to similar text-messaging campaigns: Mobile Media North America runs a program for The Walt Disney Co.'s (nyse: DIS - news - people ) ABC networks called Soap [Confidential], which gives fans text-message alerts and inside scoops on All My Children, General Hospital and One Life to Live.

Neither Disney nor Mobile Media will disclose fan numbers for Soap [Confidential]. But a previous text-message campaign for All My Children's Sexiest Man in America Contest drew some 2.5 million online and text-message votes. Fans also sent in more than 2,000 other text messages during the contest. Mobile Media is also partnered with News Corp., Spanish-language broadcaster Univision Communications (nyse: UVN - news - people ) and The Weather Channel.

And it may not matter to cell customers that they are using their minutes to watch an ad. "As long as the programming is relevant to consumers, they don't really consider it marketing," says Chris Colburn, an executive at Interpublic Group's (nyse: IPG - news - people ) interactive marketing unit R/GA, who is not involved with the 24 project. "Especially if it's something that they've opted into."

In a world of TiVo (nasdaq: TIVO - news - people ) and pop-up blockers, he says, advertising will increasingly be presented using media that's requested, or pulled, by consumers rather than pushed at them.

The mobisode format won't be limited to existing programming. "These programming spots will be most effective when they are unique spinoffs of a known property that's only available via cell phone," says Colburn, "as opposed to re-purposing something that you can already see on TV."

And that property doesn't have to be a TV show. "Any consumer product company could create their own mobisodes," says Colburn, and they will, using the same stars that headline their commercials. A Nike (nyse: NKE - news - people ) spot could star Michael Jordan, while one for PepsiCo (nyse: PEP - news - people ) might feature Britney Spears.

"Savvy advertisers," adds Colburn, "will create free content that can be sent to cell phones in advance of the paid versions coming to market."

Mobile Merger Mania

2004-12-29T16:28:00.000-08:00

December 30, 2004
http://www.emarketer.com/Article.aspx?1003198

The merger of Sprint and Nextel, announced just as Cingular and AT&T Wireless become one company, should have a considerable impact on the mobile phone market.

Up until the end of the third quarter of 2004, Verizon was by far the biggest wireless service provider, with 42.1 million subscribers, above Cingular (25.7 million subscribers), AT&T Wireless (21.9 million subscribers) and Sprint (23.2 million subscribers). However, the merger of Cingular and AT&T Wireless gives the combined companies about 47 million subscribers, more than Verizon. The merger of Nextel and Sprint, if it goes through, will make it their new company the third largest wireless operator, with around 40 million subscribers. That leaves T-Mobile, which last reported a subscriber base of 16.3 million in Q2 2004, suddenly surrounded by giants. Strategy Analytics notes that it has no obvious merger partners, and its decision to delay W-CDMA deployment puts it at a further disadvantage against its larger, 3G-equipped competitors.

One of the beneficiaries of the Sprint-Nextel merger, according to Strategy Analytics, could be handset-makers Sanyo and Samsung, particularly the latter, since they have strong relationships with Sprint and will benefit from the larger subscriber base the merger will bring. However, Motorola and Flarion will be the losers of such a deal, since they could lose out on business with post-merger Nextel (Nextel is the only mobile operator that uses Motorola's iDEN technology, but a combined Sprint/Nextel company would probably use CDMA technology).

Neither Strategy Analytics nor communications technology analysts IDATE see Verizon bidding on Sprint to stave off Nextel. Although both Verizon and Sprint have CDMA networks, making them a logical pair to merge, IDATE feels that the resulting company would be forced by regulators to rid itself of some of the large number of subscribers and frequencies it would acquire. Strategy Analytics notes that Verizon would generate higher earnings before interest, taxes and depreciation, depletion and amortization (EBITDA) even after a Sprint/Nextel merger, and is unlikely to contest the plans.

As for the larger wireless market, within a couple of years, there could be only four major providers in the US, and only three in the same league. IDATE concludes that, even though the US has traditionally been a more fragmented market than Europe, the recent merger moves have changed that equation. Many expect the reduced competition to adversely affect customers. However, IDATE notes that other players, such as cable operators, could enter the now less-crowded market, raising the level of competition once again. Wireless communications are one of the few growth areas in the telecom industry (along with VoIP), and as telecom companies (such as Verizon, SBC and BellSouth, who which own parts of the above mobile phone providers) move into broadband Internet and VoIP services, cable companies will in turn move into wireless.

eMarketer's next wireless report, on mobile marketing and e-commerce worldwide, will be released in January 2005. For a full list of upcoming 2005 eMarketer reports (PDF), visit the eMarketer Web site

Get Ready To Call ITunes (Motorola iPod Cellphone)

2004-12-29T14:56:00.000-08:00

Arik Hesseldahl, 12.16.04, 2:00 PM ET
http://www.forbes.com/2004/12/16/cx_ah_1216aapl_print.html

Apple Computer and Motorola could soon show us the mobile phone they are developing to play music purchased from Apple's iTunes online music store.

"We've said we have something coming on this in the first half of 2005 and we're definitely on schedule for that. Hopefully you'll be able to see more about it soon," says Eddy Cue, vice president in charge of applications at Apple (nasdaq: AAPL - news - people ).

If the phone is as far along as Cue suggests, then Apple Chief Executive Steve Jobs would be likely to announce it during his annual keynote speech at MacWorld Expo, scheduled for Jan. 11, 2005 in San Francisco.

In true Apple style, Cue declined to say whether Jobs will indeed address the phone at that event. "What we've talked about is a something that is valuable for the mass market," Cue says. "It has to be a phone in the middle-tier of the market, not a $500-tier phone. It has to be very seamless to use. And we're very happy with the results."

Apple announced its intentions to bring music from its iTunes Music Store to Motorola (nyse: MOT - news - people ) mobile phones on July 26 (see: "Ringing And Singing"). Jobs appeared at Motorola's suburban Chicago headquarters by video link at an event hosted by Motorola Chairman and CEO Edward Zander. At the event, Jobs took pains to point out that the phone would not compete with Apple's popular iPod music player, but should viewed as an iPod accessory. "Wouldn't it be great if you could take a dozen of your favorite songs with you" on a cell phone, Jobs said at the time.

The companies said they plan to release a phone that will connect locally to computers running Microsoft's (nasdaq: MSFT - news - people ) Windows as well as Apple's Macintosh computers using a cable or a Bluetooth wireless connection.

The direct PC connection would likely bypass wireless data networks owned by large wireless carriers such as Verizon Wireless, the joint venture of Verizon Communications (nyse: VZ - news - people ) and Vodafone (nyse: VOD - news - people ), and Cingular Wireless, the joint venture of BellSouth (nyse: BLS - news - people ) and SBC Communications (nyse: SBC - news - people ). Consumers wouldn't be required to pay network fees to download music.

That fact has raised concerns among some industry observers that carriers, eager to convince consumers to boost their usage of expensive data networks, might object to phones that don't need a network connection to download music. Those carriers, who are generally very picky about the phones they sell in their retail stores and what features they support, can easily veto a feature they don't like.

One recent and much criticized example is Motorola's V710 mobile phone (see: "A Great Phone, Tied Down"), carried by Verizon Wireless. The carrier required Motorola to disable certain features, such as the ability to sync with a PC via Bluetooth.

Connections between Motorola and Apple exist. When it was still in the semiconductor business, Motorola was tapped repeatedly as a chip supplier for Apple's computers, going all the way back to the original Apple II in the 1970s. Its former semiconductor unit, now known as Freescale Semiconductor (nyse: FSL - news - people ) supplies microprocessors for Apple's Powerbook G4 and iBook G4 lines.

In recent years Motorola has seen its share of the mobile handset market relative to Finnish rival Nokia (nyse: NOK - news - people ) improve. But in the third quarter of this year, market research firm Gartner said that South Korea's Samsung had eclipsed Motorola for global market share by slight margin. Samsung accounted for 13.8% of the market while Motorola accounted for 13.4%. Both trailed Nokia's 30.9%, according to Gartner.

Word of progress on the phone with Motorola comes as Apple announced today that it has sold 200 million songs on its iTunes Music store since the store's launch. Cue notes that while it took Apple nearly a year to sell its first 50 million songs--before it opened the service to customers on Windows--it took only another four months to break the 100 million barrier, three more to break 150 million, and then two months to break 200 million. Says Cue: "We like the way this curve is looking."

Time Warner, Sprint Look at Deal

2004-12-29T06:52:00.000-08:00

Associated Press
Update 1: Report: Time Warner, Sprint Look at Deal
12.29.2004, 09:52 AM
http://www.forbes.com/feeds/ap/2004/12/29/ap1731626.html

Time Warner Cable is reportedly working with Sprint Corp. on a deal that would allow the cable provider to offer cellphone service on a trial basis next year.

The deal would put the unit of Time Warner Inc. in a class all its own as the only major cable company to offer cellular service, and would give the two companies stakes in television, high-speed Internet access and wired and wireless phone service, The Wall Street Journal reported Wednesday.

Representatives from both companies confirmed that talks are underway but would not say if a deal was imminent, as the newspaper reported.

The service would be limited to Kansas City, Mo., in the first quarter of 2005, but could expand.

Time Warner is the country's second-largest cable operator with nearly 11 million subscribers.

NextWave modifies reorg plan, offers revenue projections

2004-12-23T11:17:00.000-08:00

By Mike Dano
Dec 23, 2004
http://rcrnews.com/news.cms?newsId=20889

NextWave Telecom Inc. modified the financial details of its bankruptcy reorganization plan. The company said the modifications enhance the potential cash distributions available, as well as add certain technical corrections and updates to the original filing.

NextWave also offered revenue projections for its network buildouts in New York and Las Vegas. NextWave said it expects revenues to grow steadily from $4.4 million in 2006 to $660 million in 2011. The company said it expects to score positive earnings before interest, taxes, depreciation and amortization by 2009, and to report $255 million in EBITDA by 2011. NextWave said it expects to score 136,000 customers by 2006, and to increase that number to around 3 million by 2011.

Earlier this month, NextWave filed its third joint plan of reorganization with the bankruptcy court overseeing the company's ongoing chapter 11 bankruptcy proceedings. As part of that plan, NextWave said it would consolidate its remaining assets, which include MMDS spectrum holdings and ITFS spectrum leases, into the new NextWave Broadband Inc. and convert current NextWave Wireless Inc. into a limited liability company that will hold cash and all the stock of NextWave Broadband.

FCC Bumps Up Nextel Valuation

2004-12-23T11:14:00.000-08:00

By Mark Rockwell
December 23, 2004
http://www.wirelessweek.com/index.asp?layout=print_page&doc_id=1340002710

WASHINGTON--The FCC has decided to bump up its valuation of Nextel Communications' spectrum in the 800 MHz spectrum swap by more than $450 million, pushing the valuation of the spectrum to more than $2 billion and sweetening Nextel's incentive to move to new spectrum.

The commission issued an interim decision on the pending Nextel/public safety spectrum swap yesterday containing the new valuation.

Nextel wasn't commenting specifically on the FCC move today, with officials at the company saying they were still reviewing the 60-page supplemental order. The company had said the amount that the government had previously estimated for the spectrum's value wasn't adequate and had campaigned vigorously in filings to get the FCC to re-evaluate the amount. A company spokeswoman said only that the company "was gratified the process was moving forward at the commission." Nextel has until Feb. 7 to agree to the FCC's plan.

Nextel has been moving to get the issue resolved at the FCC on other fronts, as well. It agreed with its primary opponent in the 800 MHz spectrum swap, Verizon Wireless, to mutually cease legal battles on the issue. Verizon Wireless today declined comment on the FCC supplemental decision.

The move to bump up the valuation of the spectrum wasn't opposed by FCC commissioners, but drew some criticism from at least one for how it was done. FCC Commissioner Michael Copps said the decision was welcome in that it helped advance the resolution of 800 MHz public safety interference. However, he said he wasn't happy with the way it was done. "I am uncomfortable, however, the decision [sic] to change the valuation of Nextel's spectrum by close to half a billion dollars -- an increase of almost 20 percent. While I believe that Nextel has demonstrated that its spectrum holdings are different than the assumption we made in the original order, I am concerned that the process that the commission used here to determine value has become imprecise," he said in a statement.

In a call with reporters today, John Muleta, chief of the FCC's wireless telecom bureau, said the FCC arrived at the new estimate because of "more granular" information on local markets that Nextel provided in the last few months. Nextel provided wireless market information on 3,200 counties, and that was much more comprehensive than the 12 markets the commission had used to estimate the spectrum's value last summer, he said.

U.S. Cellular parent to restate financials for past 3 quarters

2004-12-23T11:05:00.000-08:00

Dec 23, 2004
http://www.rcrnews.com/news.cms?newsId=20888

CHICAGO-Telephone and Data Systems Inc. said it will restate parts of its financial statements for the past three quarters, but said the move was a reclassification of cash flows and would not change the company's bottom line.

TDS owns 82 percent of U.S. Cellular Corp., and the reclassification of cash flows involves the carrier's debt repayments.

Cingular Wireless 'Raises the Bar,' Adds 200th Cell Site of 2004

2004-12-23T05:01:00.000-08:00

Thursday December 23, 8:01 am ET
http://biz.yahoo.com/prnews/041223/clth005_1.html

Network Enhancement Initiatives Pay Off in Missouri and Kansas; Cingular affirms customer commitment to 'best in class' wireless experience

ST. LOUIS, Dec. 23 /PRNewswire/ -- Cingular Wireless, the country's largest wireless provider, today announced it has completed construction of its 200th cell site in Missouri and Kansas so far this year. The site, located in the Village of Four Seasons area, at Lake of the Ozarks, MO, is a major milestone in the market's 2004 build plan, which is almost triple the size of last year's growth. The site is located on Cherokee Road, about one-half mile north of the Lodge of the Four Seasons Resort, in Camden County, and enhances coverage in the Lake area.

The new cell sites are part of an $85 million investment in Missouri, Kansas and Western Illinois designed to enhance service and expand coverage for Cingular Wireless customers traveling throughout the region. The company expects to finish the year with 210 new cell sites in operation.

"While we are pleased with our progress, we will not stop here," said Nancy Garvey, Cingular's vice president and general manager. "Last year we made the commitment to complete our advanced data and voice network, and this year we focused on increasing our coverage.

"We recognize that superior call quality and coverage are two of the most critical factors that determine customer satisfaction. We are moving aggressively to continue what we began earlier this year to ensure we have 'more bars in more places.' Our ALLOVER(SM) network* is the largest digital voice and data network in America, and the Missouri and Kansas region is an important part of that network."

Garvey said Cingular's network covers more than 268 million people and growing, providing the largest high-speed data network in America. Cingular also offers the largest mobile-to-mobile calling community with more than 46 million people.

This year's network enhancements have also focused on some of the region's most popular tourist and vacation destinations with four new sites added in Lake of the Ozarks, eight inside malls across the two-state region, one additional site at the Kansas City International Airport, and others at key attractions.

Cingular also focused on improving coverage and capacity on college campuses, including Central Missouri State University in Warrensburg, Southern Missouri State University in Springfield, MO, University of Missouri-Rolla in Rolla, Southeast Missouri State University in Cape Girardeau, and St. Louis University.

Cingular Wireless' 2004 investment comes on the heels of a two-year $250-million effort implementing an advanced GSM/EDGE voice and data network throughout Missouri and Kansas. GSM is the world standard for wireless communication, used by more than a billion people in 200 countries. In fact, more than 70 percent of the world's total wireless market is GSM. What GSM delivers for voice, EDGE delivers for data. EDGE is a high-speed wireless data service that gives customers "third generation" (3G) wireless data services with data speeds typically three times faster than what was available with GPRS.

In November, Cingular announced the next step in network evolution with plans to continue deploying the nation's fastest high-speed mobile wireless data network based on international standards. Called UMTS (Universal Mobile Telecommunications System) with HSDPA (High Speed Downlink Packet Access), this 3G technology will offer average data speeds between 400-700 kilobits per second and bursts to several megabits per second on capable devices. Cingular's UMTS/HSDPA offers customers the ability to have simultaneous voice and data sessions, which means a customer can use a handset to make a call at the same time they are checking their e-mail or browsing the Internet at high speeds.

Glitch hits Cingular's Texas network despite $100M in improvements

2004-12-22T14:56:00.000-08:00

By Mike Dano

Dec 22, 2004

http://www.rcrnews.com/news.cms?newsId=20871

A few days after a technical glitch interrupted service for Cingular Wireless customers in Dallas and Houston, the carrier announced it has spent almost $100 million this year improving its coverage throughout Texas.

The glitch blocked incoming calls for subscribers in Dallas and Houston for around two hours Monday evening. Cingular wouldn't provide specifics on the problem other than to say it was a glitch in the carrier's hardware and software. The carrier said subscribers could still place calls during the interruption.

"These things happen from time to time," said Mark Siegel, a Cingular spokesman. Due to the intermittent nature of the problem, the carrier could not say how many customers were affected.

Siegel described the glitch as "very uncommon."

"We regret any inconvenience to customers," he said.

Cingular's statements contrast significantly with local reports on the interruption that came out Monday, some of which said the carrier's network shut down across several states.

Siegel said the glitch had nothing to do with Cingular's merging with AT&T Wireless Services Inc.

In its announcement Wednesday, Cingular said it has installed more than 170 new cell sites throughout north, east, central and west Texas this year as part of a $98 million pledge to expand its network performance and coverage. The carrier said that due to its merger with AT&T Wireless it now has more than 2,000 cell sites in the state.

"While we are pleased with our progress, we will not stop here," said Adam Vital, Cingular's vice president and general manager. "Last year we made the commitment to complete our advanced data and voice network, and this year we focused on increasing our coverage, particularly in residential areas and in-building locations throughout north Texas.

Cingular said it added new sites in Dallas and Fort Worth, Lufkin, Nacogdoches, Tyler, Longview, Waco, Temple, Lubbock, Amarillo, Abilene, Midland/Odessa and areas of rural Texas.

Cingular also said Wednesday it is nearing completion of a $33 million south Florida network buildout for 2004. The expansion has resulted in greater coverage and enhanced service for Cingular's growing South Florida customer base, Cingular said.

Sprint PCS launches streaming audio, local TV services

2004-12-20T11:30:00.000-08:00

By COLIN GIBBS
By Mike Dano
Dec 20, 2004
http://www.rcrnews.com/news.cms?newsId=20833

Sprint PCS launched two new content services Monday, continuing its lead in the advanced content arena.

The carrier announced a radio-like service that will deliver short video clips and six channels of streaming audio to subscribers via their handsets.

Music Choice Today, which is available to the carrier's Vision subscribers for $6 a month, includes a line-up of channels offering pop, country, R&B/hip-hop and rock. The service also features daily video offerings, such as artist interviews and performance clips, as well as a music news service.

Music Choice, a Horsham, Pa.-based digital music provider, is teaming with Sprint to deliver Music Choice Today.

"Broadcast music is a critical piece of the overall mobile-music puzzle, and in our consumer research is one of the most popular multimedia content categories," said Clint Wheelock, director of wireless research at consultancy In-Stat MDR. "The launch of the Music Choice service is a significant milestone for Sprint as the company continues its track record of leadership in deploying a broad range of wireless multimedia services."

The music service is a first for Sprint, which offers two mobile television options, MobiTV and its own Sprint TV. A stripped-down version of Music Choice Today is being included with Sprint TV.

Music Choice Today is initially available only on one phone, the Sprint PCS Vision Multimedia Phone MM-7400 from Sanyo. The service will be available soon on other handsets, according to the carrier.
In addition, A local news TV station in North Carolina will offer news stories, pictures, traffic information and weather forecasts through a downloadable Java application over Sprint PCS' network.

Local TV station WRAL-TV said it teamed with sister company DTV Plus and wireless technology company Air2Web to offer the application, which costs $4 per month. The station said it works to stay at the cutting edge of media and has previously made forays into the Internet and high-definition TV.

"This new mobile-phone application gives us yet another way to serve the public," said Jim Hefner, vice president and general manager of WRAL-TV, "and makes sense in an increasingly wireless world."

"The fact that DTV Plus and WRAL are using Air2Web to deliver their new service represents the sheer breadth and depth of the product," said Len Emmick, vice president of sales for Air2Web. "WRAL is on the cutting edge of bringing localized content to a wireless micro-economy, and it is indicative of the growing consumption of these types of products and services by the everyday cell-phone user."

A variety of media companies have recently made moves into wireless, including Playboy and the Wall Street Journal. Most such offerings come in the form of Java applications-rather than through WAP Internet sites-because carriers usually share a percentage of Java download revenues with the company that supplied the content. Carriers do not share revenues from WAP traffic.

U.S. trails world in cell phone use

2004-12-18T13:42:00.000-08:00

By Ellen Simon
Associated Press
http://www.marinij.com/Stories/0,1413,234~26641~2606106,00.html#

Saturday, December 18, 2004 - Subscription, coverage issues have discouraged new features, customers

NEW YORK - On a trip on the Tokyo subway last year, almost everyone ignored the young man talking on one wireless phone, messaging with another and juggling a third.

Such cell phone overload would almost certainly get noticed in the United States, which lags behind the rest of the developed world in wireless use.

An estimated 57 percent of the U.S. population chats on wireless phones - not much greater than the percentage of wireless phone users in much poorer Jamaica, where 54 percent of the people have mobile phones, according to the International Telecommunications Union.

By comparison, in Hong Kong there are 105.75 mobile subscribers for every 100 inhabitants. In Taiwan, there are 110.

Sprint Corp.'s $35 billion deal this week to buy Nextel Communications Inc. is likely to spark another round of price wars and handset giveaways in the United States, but it will take more than industry consolidation and aggressive marketing to increase use.

Why? The reasons range from credit checks to network quality to coverage areas.

Wireless networks elsewhere are simply better than those in the United States, said Albert Lin, an analyst at American Technology Research.

"For a long time, the U.S. had way too many networks being supported by not enough investment," he said. "The quality of U.S. networks is only now coming close to the quality you would see in major European and Asian markets."

Not that the European model was perfect: Companies there paid $125 billion for licenses to operate "third-generation" mobile networks that enable European users to zap videos and data by phone. The result: Mountains of debt, but a chance to sell phones packed with features James Bond would love.

That hasn't been the case in the United States.

Wireless companies were the No. 2 sector for complaints to Better Business Bureaus in 2003, trailing only car dealers. They were the second-lowest ranked industry in the University of Michigan's customer satisfaction index, second only to the hated cable companies.

One reason American consumers are miffed is what Forrester Research analyst Lisa Pierce calls "big holes in rural coverage." In the Tampa, Fla. area where she lives, her wireless calls start breaking up one mile south of her home. Her husband uses a different carrier; his calls break up one mile north.

Another reason for lower cell phone use in the United States is how service is sold. The largest carriers sell phones by subscription, requiring a credit check and a commitment of at least one year.

"We have tapped out the prime-credit segment in the U.S.," said Roger Entner, a Yankee Group analyst. "Everyone who wants to have a wireless phone and can pass a credit check has one. Everyone who can pass a credit check and doesn't have one - after 10 years of a continuous barrage (of advertising), they're not going to cave."

If the industry wants more users, it will have to change its business model to embrace people with iffy credit who are willing to buy prepaid phones, he said.

Companies are hesitant to do that because it doesn't help them with Wall Street analysts, who score wireless companies' stock by the number of subscribers added to their networks, the average revenue per user and the rate customers drop their service, a figure known in the industry as "churn."

Prepaid customers won't help average revenue per user or churn, he said, so the largest mobile companies aren't interested, Entner said.

One way around that is joint ventures with companies such as Virgin Mobile USA Llc. Their customers have a higher churn rate and lower revenue per user, but they still pay, Entner said.

No one in the industry is likely to say this, but the fact is, many companies may not want more customers if those customers won't be big spenders. They would rather focus on getting existing customers to spend more money by signing up for extra services and sending text messages and photos.

At Verizon Wireless, wireless data services contributed $300 million, or 4.7 percent, to third quarter 2004 revenue, up from 2.3 percent in the same period a year ago. One-third of the company's customers use data services, which add an average of $7 to their monthly bills.

That's one reason that while the number of Verizon Wireless customers increased 16.9 percent in the most recent quarter, revenue increased 23 percent.

What's true for Verizon Wireless holds for the rest of the industry.

The average monthly wireless phone bill bottomed out at $39.88 in 1988. Since then, it's been edging up, hitting $49.49 this year, thanks to increased data use.

That's why all the major carriers are adding wireless broadband to their existing networks, so customers can get used to sending more information faster - and paying more for the privilege of subscribing to such premium services such as video news clips.

The next generation of wireless users may be machines, not people. Services such as OnStar, a subsidiary of General Motors Corp., use a combination of cell phones built into cars and Global Positioning Systems to call for help in emergencies, Lin said. Cars that call 911 when air bags are deployed use the same technology.

Similar systems are being built for vending machines to call a central office to say they need to be refilled and to monitor oil and gas company equipment used in harsh climates and using wireless networks to transmit video ads to screens in malls.

"People who think we're at a point of saturation are not including all the possible uses of technology," Lin said.

Motorola secures Nextel relationship with contract extension

2004-12-16T13:51:00.000-08:00

By Sam Omatseye
Dec 16, 2004
http://www.rcrnews.com/news.cms?newsId=20812

Motorola Inc.'s relationship with Nextel Communications Inc. marches on in spite of the carrier's anticipated merger with Sprint PCS.

The vendor announced it has signed a three-year agreement to extend its supply of iDEN infrastructure equipment to Nextel beginning Jan. 1. Both companies also agreed to implement an iDEN-based Internet Protocol-based Push-To-Talk call-processing engine known as Next Generation Dispatch.

Some industry watchers have expressed doubts over the future of iDEN technology in Nextel's roadmap, but this deal shows that it will take a few more years before the carrier does away with the technology. In fact, both Sprint's and Nextel's networks are expected to interface painlessly, even when Nextel upgrades to iDEN's next-generation protocol known as WiDEN.

Given Sprint's CDMA commitments, Nextel's post-merger iDEN roadmap will likely incorporate CDMA technology.

"It's a win for CDMA," remarked Andrew Seybold of the Andrew Seybold Group.

Motorola is also a CDMA player and would want to continue its relationship with the Nextel part of the combined networks. Now that the vendor has stepped up it core offerings, it is likely to be an important player in the new network, according to analysts.

"Extending our iDEN supply relationship with Nextel for another three years further solidifies Motorola's relationship with Nextel as supplier of iDEN technology that has existed since the early 1990s," said Adrian Nemcek, president of Motorola's networks business.

Nemcek explained that his company expects the value of its shipments to Nextel during the next three years to compare with the levels of the past two years.

The company also said more new models of iDEN handsets will reach the market during the next 12 months, and some others will incorporate WiDEN data functionality, which increases data rates by up to four times compared with currently available iDEN handsets.

The company's PTT announcement also underscores its efforts to put behind its past when it was viewed as a radio-only company, which crippled its capacity to garner some contracts. In the past quarter, it beat all other major vendors in terms of the percentage of overall wireless infrastructure contracts won.

T-Mobile May Weigh Bid For Nextel Communications

2004-12-16T06:12:00.000-08:00

12.16.04, 9:12 AM ET
http://www.forbes.com/technology/wireless/2004/12/16/1216automarketscan02.html

Banc of America Securities upgraded Nextel Communications (nasdaq: NXTL - news - people ) to "buy" from "neutral" and raised the 12-month price target to $36 from $25. Banc of America also raised the price target of "buy"-rated Sprint (nyse: FON - news - people ) to $30 from $25. The research firm said the widely anticipated merger is positive for Nextel "as it answers many strategic questions that have been an overhang for the shares." Nextel's combination with Sprint "addresses the path to 3G [third-generation technology], growth in the consumer segment and consolidates a strong pre-paid/wholesale position."

Banc of America noted that the possibility exists for a third-party bid for Nextel; with a Sprint-Nextel combination, "T-Mobile emerges as the runt of the national carrier litter." T-Mobile is a unit of Deutsche Telekom (nyse: DT - news - people ). There are strong reasons why T-Mobile might look seriously at its own bid for Nextel just as Verizon Communications (nyse: VZ - news - people ) is reported to be looking at Sprint, Banc of America said. "Acquiring Nextel would bring new national spectrum to [T-Mobile], bring an entrée into the Business and Government segment and would give the combined entity a credible shot at unseating Sprint as the leader in wireless wholesaling, potentially securing the big-daddy deals believed to be in the works with the U.S. cable companies."

Banc of America said, "We believe Verizon is interested in contemplating a run at Sprint, that it does have the financial muscle, and that Vodafone (nyse: VOD - news - people ) could be convinced to participate." Verizon and Vodafone are partners in Verizon Wireless. However, the research firm said a bid from Verizon for Sprint is "a low-odds proposition" and that it is unlikely the Sprint-Nextel deal will fall apart. Elsewhere in its wireline and wireless telecommunications coverage, Banc of America's two top picks are Sprint and SpectraSite (nyse: SSI - news - people ), which is rated at "buy" with a price target of $60. The firm's least favorite is Qwest Communications International (nyse: Q - news - people ), which is rated at "neutral" with a $3 price target.

Merger could affect Nextel Partners

2004-12-16T06:00:00.000-08:00

Thursday, December 16, 2004
Kirkland-based wireless firm is partly owned by Nextel

By JOHN COOK
SEATTLE POST-INTELLIGENCER REPORTER

The proposed $35 billion merger of Sprint Corp. and Nextel Communications could mean changes for Kirkland-based Nextel Partners Inc., including the possibility that the 6-year-old wireless carrier will get gobbled up in the aftermath of the megamerger.

Nextel Partners is 32 percent owned by Nextel and -- in addition to the similar name and logo -- shares a network, billing, advertising and other business functions with its larger partner. It even helps sponsor the Nextel Cup Series, the popular NASCAR competition.

A sale of Reston, Va.-based Nextel will trigger a scenario in which Nextel Partners also could be acquired, although a company spokeswoman said it is "not a foregone conclusion that they would automatically buy us."

John Chapple, chief executive officer at Nextel Partners, said the company has the option to participate in a sale to Sprint Nextel if the new corporation overcomes regulatory hurdles.

"Depending upon circumstances, it is something that may be pursued or may not be pursued," Chapple said. "It is premature to know that at this juncture."

In a statement issued yesterday, Sprint and Nextel said they would address the Nextel Partners buyout "at the appropriate time in the context of the merger process."

Backed by Seattle area billionaires Craig McCaw and Bill Gates, Nextel Partners has 1.5 million mobile phone customers in 31 states. Most of the customers, who can freely roam onto the Nextel national network, reside in small to medium-sized cities such as Sun Valley, Idaho, and Amarillo, Texas. The company employs about 3,000 people, including 60 in Kirkland. It reported revenues of $996 million for the first nine months of the year.

If the Sprint Nextel deal is approved, Nextel Partners shareholders are required to hold a special meeting in which they decide whether to sell to the new entity. Shareholders have up to 545 days to make a decision from the time the meeting is called, according to filings with the Securities and Exchange Commission.

If a majority of the non-Nextel shareholders votes in favor of the buyout, than the deal is consummated at a "fair market value," the filings said.

Chapple called yesterday's merger announcement between Sprint and Nextel a positive development. But he also said that Nextel Partners will continue to thrive as an independent and profitable company.

"We believe there is a significant amount of upside in growing this company beyond where it currently is," Chapple said. "In many respects, we are in adolescence as a company."

The company's board includes Timothy Donahue, the Nextel Communications chief executive who is slated to become chairman of Sprint Nextel.

One potential bottleneck for an independent Nextel Partners is its reliance on a wireless technology called Digital Enhanced Network or iDEN. A proprietary technology that works primarily with Motorola phones, the network will be phased out by Sprint Nextel some time after 2007.

That could leave Nextel Partners with a network that does not cover large portions of the country. It also could present the company with the expensive proposition of switching or upgrading networks.

Chapple didn't appear too concerned about the decision by Sprint Nextel to move away from iDEN.

"What we are telling our customers and investors is that we are going to continue to provide excellent service for the foreseeable future," he said. "And the network we operate ... is going to be up and running for years to come."

Shares of Nextel Partners fell 57 cents to close at $18.69. It hit a 52-week high last Friday on speculation of the merger.

Cingular boasts of enterprise deals

2004-12-15T11:34:00.000-08:00

Dec 15, 2004
http://www.rcrnews.com/news.cms?newsId=20797

ATLANTA-Highlighting its growing presence in the enterprise market, Cingular Wireless L.L.C. said it has closed deals with more than 135 business and government customers in the first 45 days since its acquisition of AT&T Wireless Services Inc. was approved Oct. 26. The carrier noted the customer include the U.S. Navy, McDonald's Corp., Ross Stores Inc. and Old Dominion Freight Line Inc.

"We have not missed a beat even while in the integration of two [business-to-business] organizations into a single, business-focused entity within the new Cingular takes place," explained Kent Mathy, president of Cingular's business markets group. "Our account teams have been as aggressive as ever in pursuing new business, and our customers and prospects remain keenly interested in the value proposition that Cingular brings to the table."

Wireless industry analysts had expressed some concern regarding Cingular's ability to take advantage of AWS prominent position in the enterprise space following its $41 billion acquisition of AWS. Cingular had been regarded previously as a stronger player in the consumer space, though the carrier had a niche offering in the business space with its recently spun-off Mobitex network that served as the backbone for Research In Motion Ltd.'s enterprise-focused BlackBerry devices and e-mail platform.

Mixed ruling in RIM patent suit could affect entire wireless e-mail market

2004-12-15T11:33:00.000-08:00

By Mike Dano
Dec 15, 2004
http://www.rcrnews.com/news.cms?newsId=20794

BlackBerry maker Research In Motion Ltd. suffered a somewhat mixed ruling in its legal battle with patent holding company NTP Inc. A U.S. federal appeals court ruling affirmed 11 of NTP's 16 claims against RIM-a potentially serious blow for the device maker-but also sent back the remaining five claims to a Virginia district court for reconsideration.

The ruling has no immediate affect on RIM or NTP, although it further limits RIM's options for victory. NTP has won a series of legal skirmishes since a jury ruled against RIM in 2002.

The ruling took investors on a wild ride Tuesday. RIM's stock shot up from around $90 per share to almost $105 per share on news of a decision in the case. Nasdaq then halted trading to give investors a chance to review the news. When trading resumed, RIM's stock dropped to around $85 per share at the close of trading. On Wednesday the company's stock was trading at around $82 per share.

Both NTP and RIM found parts of the ruling to applaud. NTP pointed out that the appeals court "unanimously affirmed the prior jury verdict" and said it was confident that it would win a favorable ruling on the remaining five claims. RIM on the other hand pointed out that the U.S. appeals court "vacated" the district court's judgement as well as its injunction. The district court last year issued an injunction on the sale of RIM's products-which would have forced the company to turn off its BlackBerry sales and service-but also stayed the injunction pending an appeal. However, the threat of an injunction still looms as a final outcome.

RIM also pointed out that the U.S. Patent and Trademark Office is re-examining NTP's patents, a move that creates a further layer of ambiguity to an already complicated case. The patent office could take another year to make a ruling on the patents, and it's unclear what effect the ruling would have on the outcome of the case.

Observers agree that an injunction is highly unlikely as it wouldn't benefit RIM or NTP-if RIM ultimately loses, it would likely sign a licensing agreement for the use of NTP's patents. The district court's ruling sets the royalty rate at 8.55 percent-higher than most royalty arraignments in the wireless industry.

However, the case could stretch beyond the confines of the RIM vs. NTP fight. Those in the industry have said that NTP's patents are so broad that they could apply to a variety of wireless e-mail offerings, which would cause a major stir in a market built around the service.

Investment firms cautioned patience on the case, which could still take years to ultimately resolve. Goldman Sachs reiterated its neutral rating, while ThinkEquity said it remains bullish on the company. Both firms make a market in RIM securities.

[MELODEO] Warner, Melodeo Join for Cell Phone Music Downloads

2004-12-15T10:19:00.000-08:00

By ECT News Business Desk
E-Commerce Times
12/15/04 10:19 AM PT
http://www.ecommercetimes.com/story/Warner-Melodeo-Join-for-Cell-Phone-Music-Downloads-38997.html

Melodeo CEO Bill Valenti said: "There's no denying the market potential for music delivered to mobile phones. In 2003, there were approximately 526 million wireless phones sold. Nearly everyone carries a mobile device. It is the one device that is always with you, and music is largely an impulse buy."

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Melodeo and Warner Music Group today announced they have signed an agreement to allow consumers to securely download entire tracks from WMG's music catalog directly to their mobile phones Latest News about mobile phones.

Melodeo, a Seattle-based company, provides music to wireless subscribers through a mobile-music solution installed on the wireless phone.

The software allows consumers to shop, preview, purchase, play and store full-length music tracks using their wireless phone.

Wireless operators also can deploy Melodeo technology on their networks, allowing them to offer subscribers access to WMG's catalog. With the service, consumers can purchase and download full-length songs directly from their handsets, over the air to their wireless phone.

Concurrently, Telefonica, a leading operator in Spanish and Portuguese markets, today announced that it also will adopt the Melodeo mobile-music solution, allowing the company to provide secure digital music to Telefonica wireless subscribers in Spain. Telefonica, the sixth largest operator in the world in terms of market capitalization, offers the service to subscribers under the brand name Mplay.
Next Step

"The companies believe that enabling full-length downloads directly to mobile phones will have a very significant impact on the music and wireless industries," Bill Valenti, Melodeo CEO, explained. "Melodeo has developed an integrated, turn-key solution that delivers a very user-friendly experience."

Michael Nash, senior vice president for Internet Strategy and Business Development at Warner Music Group, said: "With the global penetration of the wireless platform and the dramatic expansion of mobile phones' functionality, our agreement with Melodeo positions us to take advantage of a dramatic next step for consuming music."

Melodeo's Valenti explained that another reason the major record companies are enthusiastic about Melodeo's solution has to do with digital rights management (DRM). "In an age where DRM is top-of-mind, Melodeo offers not only a superior technological solution, but it has taken great care to secure and protect digital media rights."

Looking forward, Valenti said: "There's no denying the market potential for music delivered to mobile phones. In 2003, there were approximately 526 million wireless phones sold. Nearly everyone carries a mobile device. It is the one device that is always with you, and music is largely an impulse buy."

He added: "We know consumer interest in downloadable music, as demonstrated by the popularity of the iPod and other digital music players, is tremendous. But because of the ubiquity of cell phones Latest News about cell phone, the potential for music delivery to wireless phones is phenomenal, and will go far beyond the simple download of ring tones."

Bob Egan, president of Mobile Competency, said: "A couple of holiday seasons ago it was the camera phone. As we approach this holiday season, it is clear 2005 will ring in with music, and that surely will be a love song to subscribers and mobile operators alike. "
Convergence of Lifestyles

Egan explained: "Putting music on a mobile phone combines what have been two separate, yet instinctive and natural lifestyles, into one powerful package that everyone carries with them."

Melodeo's software incorporates the most advanced audio codec, aacPlus from Coding Technologies, which produces music files in the 500 to 750K range, significantly smaller than a typical MP3 Latest News about MP3 file, in a solution that is downloaded, not streamed, saving valuable bandwidth.

Subscribers can download the Melodeo client software, which offers stereo capabilities and music-store connectivity, over the air, or the software can be built into the handset at the point of manufacture. While phone memory varies by brand, users can expect to store roughly 75 to 125 tracks with 64 MB of memory.

Sprint, Nextel Take Deal Public ($35 Billion)

2004-12-15T05:20:00.000-08:00

By Scott Moritz
Senior Writer
12/15/2004 11:10 AM EST
Updated from 8:20 a.m. EST
http://www.thestreet.com/_googlen/tech/scottmoritz/10199101.html

Sprint (FON:NYSE - news - research) and Nextel (NXTL:Nasdaq - news - research) confirmed their $35 billion merger Wednesday, setting ambitious plans for growth along with extensive cost-cutting.

The combined company is to be called Sprint Nextel, with operational headquarters in Sprint's hometown of Overland Park, Kan. Sprint Chief Gary Forsee will run the company, which will be the third-largest U.S. wireless carrier behind Cingular and Verizon Wireless, boasting about 39 million subscribers. Nextel Chief Tim Donahue will be chairman.

"Sprint Nextel is expected to have the highest average revenue per user (ARPU) in the wireless industry and to be positioned to lead the industry in sustainable revenue growth," the companies said in their Wednesday morning press release. "Sprint Nextel will be well positioned in the fastest-growing areas of the telecommunications industry, including mobile data and push-to-talk services, where Sprint and Nextel are innovators in technology."

Shares in both companies slipped modestly Wednesday following a sharp run-up in recent days. Investors have applauded the match of Sprint's strong consumer business with Nextel's loyal business following.

"This is good for Nextel because it solves their technology migration issue," says analyst Lisa Pierce of Forrester, referring to Nextel's need to upgrade its network for the so-called third-generation suite of fast wireless data capabilities. Meanwhile, she sees the deal as a good one for Sprint because it strengthens the company's hand in the lucrative business services market.

Early Wednesday, Sprint fell 29 cents to $24.81 and Nextel dropped 9 cents to $29.90.

Meanwhile, a rumored bid from Verizon Wireless failed to materialize even as many investors continue to see the company as the key to how the industry's consolidation trend plays out.

Terms call for Nextel shareholders to receive stock and cash equal to 1.3 Sprint shares, a ratio that currently comprises 1.28 Sprint shares plus 50 cents. Shareholders of both companies would end up owning exactly half of the surviving entity and the board would include six directors from each.

The companies confirmed several features that had been previously reported, most notably a plan to spin off Sprint's local phone business after the transaction is completed, probably late next year. That business does about $6 billion in annual revenue.

The two companies currently have a combined market cap of about $70 billion, more than 35 million wireless subscribers via their own networks and 5 million more through partnerships. By merging, they expect to achieve "operating cost and capital investment synergies" of more than $12 billion.

At a highly polished Wednesday morning press conference, the companies indicated they expect to gain those synergies through back-office consolidation, network efficiencies and rationalized capital spending, among other things.

The plan calls for the companies to trim employment sharply over the next year-plus, through layoffs, attrition and the spinoff of the Sprint local phone business, the companies said at the press gathering at Manhattan's St. Regis hotel.

Sprint and Nextel said they have around 77,000 jobs together right now and that they expect to have 55,000 by the end of 2006, when integration of the deal is in full swing.

One advantage of the Sprint Nextel tie-up from a strategic point of view, Pierce indicates, is that the merger makes the combined company far more attractive as a partner for the big cable companies that are increasingly vying for telecom customers. The new company's broad appeal for consumers and business customers puts it "in a stronger position" to strike deals with big cable operators such as Comcast (CMCSA:Nasdaq - news - research) as cable and telco operators alike aim for increased bundling of various services.

Pierce says sticking points remain, however, such as how the combined company will handle the sunset of Nextel's iDEN network. That technology is one that's not used by other players in the industry, and has been widely seen as a hurdle for a combined Sprint Nextel to overcome. Pierce expects the company to continue using iDEN for a while before finally converting all its customers to the fast-growing code division multiple access, or CDMA, standard.

Smoothly handling the transition will be a crucial challenge for the company because Nextel's so-called push-to-talk walkie-talkie function is key to its industry-leading customer loyalty and monthly revenue figures.

She also notes that serving business customers hasn't been a core strength of Sprint, which has mostly served consumers, especially on the wireless side. "Sprint will have to learn the expertise they will need to serve these customers," Pierce says.

Nextel noted that the deal could trigger a put right owned by its publicly traded affiliate Nextel Partners (NXTP:Nasdaq - news - research), which sells wireless services in a handful of U.S. cities. The price of that buyback will be determined after an interval that could "extend for a substantial period of time after completion of the merger." Nextel owns 32% of Nextel Partners.

While the agreement is now publicly formalized, it could still face hurdles if Verizon decides to step in with its own bid for Sprint. The Wall Street Journal reported that Verizon this week received a blessing from wireless partner Vodafone (VOD:NYSE - news - research) to make a bid after considering one for more than a year.

On Wednesday, the newspaper said Verizon has made no decision on a Sprint takeover offer, and it appeared no closer to one than it was earlier in the week. The Sprint-Nextel deal reportedly includes a $1 billion breakup fee that would have to be paid by a hostile acquirer.

Vodafone not in talks with Verizon about Sprint

2004-12-14T08:43:00.000-08:00

Reuters December 14, 2004, 8:43 AM PT
URL: http://news.zdnet.com/2100-1035_22-5490231.html

British-based mobile phone giant Vodafone Group said Tuesday that it was not in talks with U.S. partner Verizon Communications about a possible bid for U.S. rival Sprint.

"There have not been any discussions, and we are not in discussions, with Verizon about any offer for Sprint," a company representative told Reuters.

The Wall Street Journal reported earlier that Vodafone had given its U.S. joint venture partner approval for a possible $40-billion-plus bid for rival Sprint, the third-ranked U.S. mobile phone carrier.

Report: Verizon Gets Backing on Sprint Bid

2004-12-14T07:50:00.000-08:00

Associated Press
Update 2: Report: Verizon Gets Backing on Sprint Bid
12.14.2004, 10:50 AM
http://www.forbes.com/technology/ebusiness/feeds/ap/2004/12/14/ap1710555.html

Verizon Communications Inc., the nation's biggest phone company, has reportedly won the support of its wireless partner, Vodafone Group PLC, should it decide to make a bid for Sprint Corp., the third-biggest U.S. long-distance phone company.

The Wall Street Journal cited unidentified people familiar with the situation for its report on Verizon's moves, which come even as Sprint is reportedly near a $35 billion deal to merge with the smaller wireless company Nextel Communications Inc.

Spokesmen for both Verizon and Vodafone had no comment on the report. Verizon shares fell 68 cents to $40.60 in morning trading on the New York Stock Exchange, where Sprint shares rose 76 cents, or 3 percent, to $25.20. Nextel stock lost 47 cents to trade at $29.52 per share on the Nasdaq Stock Market.

Verizon would consider a deal with Sprint as a way to fight cable companies, which are entering the telecom business, Greg Gorbatenko, an analyst with Marquis Investment Research, wrote in a research note. The cable companies can sell Internet connections and home phone service, but they need a wireless "reseller" partner to offer customers a complete telecom package.

Sprint is an active reseller. Of its 23 million wireless subscribers, 5.9 million come through reselling deals with companies such as Qwest Communications International Inc.

"If Verizon takes out Sprint, who would the cables resell wireless through?" Gorbatenko wrote in a research note.

Sprint, based in Overland Park, Kan., and Nextel, based in Reston, Va., have declined comment on their talks. A combination would create a wireless company that would trail only the cell phone industry Verizon Wireless and Cingular Wireless.

The Journal said Sprint's board met Monday and was expected to continue meeting Tuesday to discuss the proposed Nextel merger and that the Nextel board is also considering the possible deal. It said a deal could be announced Wednesday.

The newspaper said Verizon Communications officials have been meeting to discuss a possible takeover of Sprint in recent days and have studied such a deal for 18 months. But it said it remains unclear whether Verizon will make such a bid.

A successful bid by Verizon would make Verizon Wireless, the nation's second-largest wireless operator, the largest in the industry by far, with more than 65 million customers. Just seven weeks ago, Cingular Wireless passed Verizon for the top spot by completing its acquisition of AT&T Wireless Services, giving Cingular roughly 47 million subscribers.

Motorola reorganizes

2004-12-13T13:04:00.000-08:00

By Sam Omatseye
Dec 13, 2004
http://www.rcrnews.com/news.cms?newsId=20758

After several months of either denying or keeping mum over a pending realignment, Motorola Inc. finally let its new structure out of the bag.

In the fashion of other big players like Nokia Corp., L.M. Ericsson and Nortel Networks Ltd., Motorola has organized its operations into four business groups: personal devices, networks, government and enterprise, and the connected home. The new changes take effect Jan. 1, according to the company.
continued below

"Today's announcement builds on the progress we have made over the past two years in improving our focus and operating efficiency. Aligning our organization with our vision of seamless mobility takes it to the next level," said Ed Zander, chairman and chief executive of Motorola.

"With a more streamlined structure, Motorola will boost its flexibility and speed to capitalize on new opportunities, allowing us to deliver seamless mobility to our customers worldwide."

Ron Garriques will take charge of the personal devices group. Adrian Nemcek will lead the networks division. Greg Brown will preside over the government and enterprise division, while Don Moloney will head the connected home division. They all are presidents of their divisions.

The company said all the activities of the divisions will be centrally architected, and this will include supply chain operations, information technology, finance, human resources, legal, strategy and business development, marketing, quality and technology.

Motorola will also form a new organization to oversee its supply-chain business. This will entail manufacturing, distribution and procurement worldwide, said the company. It has not picked a person to fill the position.

The personal devices division will work on multi-mode, multi-band devices for enterprises and homes, said the company. The networks division will leverage talent, research and development, as well as operating efficiency for such existing radio access networks, core Internet Protocol networks businesses like IMS/softswitch, iDEN infrastructure, wireline access, wireless local area network technologies and other broadband services and applications, said the company.

Its government and enterprise areas will focus on Fortune 500 class enterprises, governments and automobile manufacturers. The connected home group will leverage existing and new cable and satellite customers for broadband networked homes.

Wireless Mergers Data (AWS/CING/PCS/NXTL)

2004-12-13T09:52:00.000-08:00

Brief Notes on Wireless Mergers in 2004
12.13.04

AT&T Wireless/Cingular
$41 billion
47 million subs

Sprint + Nextel
$36 billion
38 million subs

(Verizon Wireless)
No merger to date
42 million subs

LG Electronics Opens Mobile Phone R&D Center in Europe

2004-12-13T09:10:00.000-08:00

13th December, 2004
http://www.3g.co.uk/PR/December2004/8806.htm

Europe : LG Electronics has established its European R&D center in Paris, France to expand its GSM and WCDMA mobile phone market. The European market is considered crucial to meet the company's goal of entering the global handset industry's 'global top 3' by 2006.

On December 6, Mr. James Kim, President for European Headquarters at LG Electronics, attended the opening of R&D center in Villepinte, Paris.

The newly-established R&D center will enable the company to develop the most sophisticated multi-media feature phones in the most competitive mobile phone market and to positively accommodate diverse market and customer needs in Europe. In addition, LG Electronics will be able to strengthen its relationship with European service providers such as Vodafone, Hutchison, T-Mobile, Orange and other regional operators by establishing an R&D base in the region. Likewise, the company can positively meet specific market needs as well as development of 3G and 4G next-generation mobile phones.

In particular, operating in Paris are organizations such as ETSI (European Telecommunications Standards Institute) and 3GPP (Third Generation Partnership Project) that oversee technological standards of 2-G and next-generation mobile telecommunication services. As such, the location is ideal for companies to conduct mobile telecommunication standards-related works.

President Moon-Hwa Park of Telecommunication Equipment & Handset Company at LG Electronics said, "the establishment of the European R&D Center, together with the expansion of mobile phone production bases in India, Brazil and other areas, has strengthened our global R&D system that can ensure LGE's localization business strategy."

Currently, LG Electronics operates R&D centers in San Diego, Beijing, Bangalore, and Moscow. The opening of R&D center in Paris has strengthened LGE's global R&D presence in penetrating the global mobile phone market.

James Kim, President for European Headquarters, added, "the establishment of R&D center in Europe has created an environment in which we can efficiently respond to R&D issues in the region. We will position our research center as the R&D hub penetrating European mobile phone market by increasing the number of researchers by more than 100-plus people next year.

Meanwhile, LG Electronics is continuing its efforts to secure superior human resources pool. The company will recruit more than 30% of its researchers outside Korea and secure a total of over 5,000 mobile handset R&D manpower by 2006.

Sprint, Nextel could make deal this week

2004-12-13T06:07:00.000-08:00

By Leslie Cauley and Paul Davidson, USA TODAY
Posted 12/13/2004 2:58 AM
Updated 12/13/2004 3:07 AM
http://www.usatoday.com/tech/wireless/phones/2004-12-13-sprint-nextel_x.htm

Sprint and Nextel Communications could announce a $35 billion merger this week in a deal that would forge a third goliath in the quickly consolidating wireless industry.

The union would complete Sprint's transformation from perennial also-ran in the troubled long-distance business and strengthen its No. 3 position in the red-hot wireless world.

Talks are ongoing and could still fall apart, but the two sides appear to be close to finalizing terms, say people with direct knowledge of the discussions.

Though the deal is being touted as a merger of equals, Sprint would buy Nextel, paying 1.3 shares of its stock for each Nextel share, and could control slightly more than half the company. Those terms place no premium on Nextel.

Sprint also would spin off its local phone business. The companies declined to comment.

The merger would create a giant with 38 million subscribers and the heft to compete with the top two players. Cingular, which recently merged with AT&T Wireless, has 47 million subscribers and Verizon Wireless has 42 million.

While Sprint targets consumers, No. 5 carrier Nextel has been more profitable as it serves lucrative business customers with its popular walkie-talkie service.

"These two are really the missing pieces for each other," says Yankee Group analyst Roger Entner.

Nextel and Sprint have held on-again, off-again talks for months. The latest round was driven by Nextel, which was on the verge of deciding which technology platform to adopt for its next-generation data services.

Nextel's flagship "push to talk" service is favored by small businesses such as construction companies and taxi services. Subscribers are fiercely loyal, but the service is limited. It can't handle broadband. And its ability to access the Web for online gaming and shopping is limited. Worse, Nextel's systems are near capacity, all but forcing the carrier to take remedial steps.

The merger would do away with Nextel's need to rebuild its network. It could piggyback onto Sprint's, saving several billion dollars. Nextel gradually would prod its customers to switch their handsets for those with Sprint technology.

Sprint CEO Gary Forsee would be chief executive of the new company. Nextel CEO Tim Donahue would serve as executive chairman. Corporate headquarters would be in Reston, Va., where Nextel is based. Operating headquarters would be in Overland Park, Kan., Sprint's base. Earlier, the talks had stalled over the headquarters location.

John Hoffman, a former senior Sprint executive, says the toughest part of the deal would be melding cultures. Nextel is "tough, scrappy and entrepreneurial," says Hoffman. "They're like their construction customers." Sprint is "more mature. ... There will be some clashes."

Report: Sprint/Nextel reach tentative $36B deal

2004-12-10T17:10:00.000-08:00

By Dan Meyer
Dec 10, 2004
http://www.rcrnews.com/news.cms?newsId=20747

A Wall Street Journal report Friday afternoon citing sources on both sides indicated No. 3 Sprint Corp. and No. 5 Nextel Communications Inc. had reached a tentative agreement on an all-stock $36 billion deal. According to the report, Sprint would pay around 1.3 shares for each Nextel share plus a small cash consideration that would value the deal at more than $36 billion. Sprint Chief Executive Officer Gary Forsee would become CEO of the new operation with current Nextel CEO Tim Donahue assuming the chairman position. Both companies would also share board positions.

Analysts noted that Nextel, which is the last remaining independent nationwide wireless operator, would have the most to gain from the deal and would thus likely have to cede final ownership to Sprint for a deal to be completed.

Neither Sprint nor Nextel would comment on the report, though reports indicated that the deal could be announced as early as next week.

"Like everybody else, we do continue to evaluate our strategic opportunities," said Sprint Chief Financial Officer Bob Dellinger at a Credit Suisse First Boston conference this week. "That's appropriate for all businesses, and we continue to do that."

SG Cowen & Co. telecommunications industry analyst Tom Watts, who has been speculating on a possible deal between Sprint and Nextel since earlier this year, put the possibility of an agreement being reached at more than 70 percent.

One source noted rumors of the deal could have been a test balloon sent up by both companies to gauge investor reaction or a move by Nextel to place pressure on other industry players to begin merger talks. Sprint's stock was up more than 8 percent Thursday following the report, while Nextel's stock increased more than 6 percent.

The Dec. 13 issue of RCR Wireless News will include a full report on the latest Sprint/Nextel developments and will be available to paid subscribers at RCRNews.com late Friday, Dec. 10.

Motorola would stand to lose from Sprint-Nextel merger

2004-12-10T16:33:00.000-08:00

Posted on Fri, Dec. 10, 2004
http://www.kansascity.com/mld/kansascity/business/technology/10388878.htm?1c

NEW YORK (Dow Jones/AP) -- Merger talks between wireless carriers Sprint Corp. and Nextel Communications Inc. aren't sounding very jolly to one equipment supplier: Motorola Inc.

For years, the Schaumburg, Ill., provider of wireless products and infrastructure equipment has enjoyed an almost exclusive relationship with Nextel -- supplying networking equipment and handsets to the wireless carrier. That advantageous agreement would end if Nextel joins forces with Sprint, industry experts say.

By contrast, a merger would likely provide a boost to Sprint's suppliers: Qualcomm Inc., Lucent Technologies Inc., Nortel Networks Corp. and handset makers such as Samsung, Audiovox Corp. and others.

The cause for the unequal distribution is a likely technology switch for Nextel, the smallest of the national wireless carriers. The Reston, Va., company has been something of a technology maverick, using a unique iDEN standard for its network and proprietary ``push to talk'' service. Sprint, on the other hand, has been running its network on CDMA -- the same standard that Verizon Wireless uses.

In order for the two companies' networks to work with one another, it would be easier for Nextel to switch to CDMA rather than the other way around, experts said. Sprint a has large nationwide network that would cost a lot to convert or rebuild.

A Sprint conversion would be like ``somebody wearing too many colors ... too many technologies are not a good thing,'' said Rick Black, an analyst at Blaylock & Partners.

Adding to the likelihood that Nextel will convert to CDMA is the fact that the company has already been looking into switching its platform technology. Nextel has been testing -- with Motorola -- a new wireless standard based on CDMA. The company has also been testing a unique technology, called OFDM, with New Jersey-based startup Flarion Technologies.

``Obviously, there is still lots of uncertainty about how they will go through consolidation,'' said Bill Choi, said an analyst at Kaufman Brothers. A Nextel CDMA conversion would provide a windfall to whatever company gets to supply the technology -- whether that's Motorola, Lucent, Nortel or whoever.

An area with more certain impact for suppliers if Sprint and Nextel merge is handsets. Motorola is currently the sole handset provider to Nextel -- and the handsets it does sell to the carrier are also its most profitable. Sprint buys phones from a variety of makers including Motorola, but also Samsung, Audiovox Corp. and others.

Motorola will likely ``wrangle themselves good market share'' with a combined company, but it wouldn't be the same kind of advantage it's seen in the past, Choi said. Meanwhile, a merger means that Sprint's phone providers would be able to get business from a customer who was previously off-limits.

But the biggest winner of the combination would be Qualcomm, which already licenses and makes chips using CDMA technology to Sprint. Qualcomm has also been working with Nextel for the past two years on developing a new push-to-talk technology, QChat, that can work on a CDMA platform.

A merger would likely mean that Qualcomm ``could collect royalties on additional CDMA handset sales and sell most of the chipsets for handset sales,'' Wojtek Uzdelewicz, a Bear Stearns analyst, wrote in a note.

A representative from Motorola couldn't be reached immediately for this story. A Nextel spokeswoman declined to comment on the possible merger.

Shares of Motorola closed down $1.39, or 7.8 percent, at $16.33 Friday on the New York Stock Exchange.

Life With Sprextel

2004-12-10T15:10:00.000-08:00

David M. Ewalt, 12.10.04, 6:10 PM ET
http://www.forbes.com/2004/12/10/cx_de_1210sprintnextel_print.html

Are Sprint and Nextel tying the knot? Neither company is talking, but published reports say the deal is well on its way. Observers seem to agree the union makes sense, and that further consolidation of some sort in the wireless market is a foregone conclusion.

So assume for a moment--and this is a big assumption, because any negotiation like this can always fall apart--that all the details work out, and sometime next year a new "Sprextel" or "Nexint" strides onto the marketplace. What would the deal mean for the other players in the mobile industry?

Sprint (nyse: FON - news - people ) currently comes in a distant third in the rankings of U.S. wireless carriers, with about 17.3 million customers, and Nextel (nasd: NXTL - news - people ) is way back in number five, with about 14.5 million subscribers. A combined venture would be a much more imposing competitor, boasting 32 million customers, and placing it closely behind number two Verizon Wireless, with 42 million customers, and number one Cingular Wireless, with 47 million subscribers.

Those three companies alone would possess about 75% of the US mobile market, but consumers probably don't have to worry much about lack of competition. With T-Mobile USA--a subsidiary of Deutsche Telekom AG (nyse: DT - news - people )--also in the picture, the US would still have four big carriers fighting for share as the cellular marketplace begins to reach saturation. Already, 80% of American adults between the ages of 25 and 54 currently own a cell phone.

"The resultant four national players would continue to exert weak pricing power," says a new Deutsche Bank research note.

The first casualty of this new marketplace could be T-Mobile. As Merrill Lynch said on Friday in a research note, the company would be "locked into the number four position among the national carriers, with no obvious path outside of organic growth." After a couple of years, there just wouldn't be much more room to expand, putting the company under increasing pressure. As time passes--and as the company has to deal with the requirements of building up its network to meet high-speed 3G standards--the pressure could be too much to bear.

A consolidated marketplace would also particularly press Verizon Wireless against the rails. The company--a joint venture of Verizon Communications (nyse: VZ - news - people ) and Vodafone Group-- is still reeling from getting knocked out of first place after Cingular--a joint venture between SBC Communications (nyse: SBC - news - people ) and Bell South (nyse: BLS - news - people )--completed its acquisition of AT&T wireless in October.

A combined Sprint/Nextel would make life much hairier for Verizon, not only because of its size, but because of the new company's strong base of corporate clients. "It would have especially great potential in the business services marketplace," says Forrester analyst Lisa Pierce. At present, 80% of Nextel subscribers are on corporate contracts, due largely to popularity of its push-to-talk cellular service. Sprint has a smaller but still very strong business services segment, and its white-collar corporate base compliments Nextel's more blue-collar customers.

A merger would also have significant ramifications on the hardware side of the industry. Nextel currently operates its cellular networks using Motorola's (nyse: MOT - news - people ) iDEN technology, making it the odd man out amongst the CDMA and GSM networks run by all its competitors. In merging with Sprint, Nextel would likely abandon iDEN in favor of CDMA, taking a huge chunk out of Motorola's business and leaving the equipment vendor with only a handful of smaller customers around the world.

But for Sprint and Nextel, a merger is probably a good move. They plug the holes in each other's business, and the combined company will be a strong counterpoint to market leaders Verizon and Cingular. Investors stand to gain not only from the deal itself, but from the eventual profits of a stronger, more competitive carrier. As for customers of an all new Sprextel or Nexint, there will probably be a few bumps and bruises as the companies integrate technology, but nothing to call home about.

Sprint, Nextel consider merger, says report

2004-12-09T11:47:00.000-08:00

By Dan Meyer
Dec 9, 2004
http://rcrnews.com/news.cms?newsId=20722

Less than two months after Cingular Wireless L.L.C. garnered governmental approval for its $41 billion acquisition of AT&T Wireless Services Inc., creating the nation's largest wireless operator, a Wall Street Journal article today indicated another big deal could be in the works between No. 3 Sprint Corp. and No. 5 Nextel Communications Inc.

The report cited speculation on Wall Street that a possible deal between the two carriers was becoming increasingly likely, though neither Sprint nor Nextel would comment on the report.
continued below

Analysts have speculated about a possible combination between Sprint and Nextel for some time, noting such a deal would create a third "mega-carrier" with more than 38 million subscribers that could compete more effectively against the recently strengthened Cingular and No. 2 Verizon Wireless. Many have also noted that following Cingular's acquisition of AWS, government regulators would likely approve only one additional merger between the country's nationwide operators, which would bring the number of large carriers down from six to four.

Further fueling merger rumors is Nextel's pending decision on its next-generation technology path. Analysts noted that if Nextel decides to install a CDMA-based network using the 1.9 GHz spectrum it's likely to acquire from the Federal Communications Commission as part of a re-banding effort designed to reduce interference in the 800 MHz spectrum band, Nextel could set itself up for a possible deal with either Sprint or Verizon Wireless.

On the other hand, analysts noted that if Nextel decides to implement a non-traditional technology similar to Flarion Technologies' Flash-OFDM system, which Nextel has installed in parts of North Carolina, the carrier could be readying to remain a standalone entity.

Another potential tie-in between Nextel and Sprint is that both companies control significant spectrum holdings in the 2.5 GHz spectrum band, which both carriers have previously said they could use for next-generation services.

Standard & Poor's Equity Research reiterated its "strong buy" on Nextel's shares, noting a combination with Sprint would provide an even stronger leadership position in the wireless business market. Nextel is currently seen as a strong player in the business market led by its Direct Connect walkie-talkie service, while Sprint has recently reorganized its business operations to provide a better focus on lucrative business customers.

Dude, Ring Me Up A Game

2004-12-02T12:00:00.000-08:00

David M. Ewalt, 12.02.04, 3:00 PM ET
http://www.forbes.com/2004/12/02/cx_de_1202kidphone_print.html

Forget the PlayStation Portable and ditch that GameBoy. Kids might be pining for those hot portable gaming systems now, but the real future of mobile gaming could already be in their pocket.

Today's kids are mobile experts, utterly comfortable with tiny screens and capable of typing with their thumbs faster than many adults can on a keyboard. They're also huge consumers of wireless phone service, the fastest growing group of cellular users and the heaviest users of minutes and data. Pair those characteristics with today's handsets--big, bright color screens, on-board memory and high-speed data connections--and you've got a recipe for gaming nirvana. Mobile gaming is taking off, and thanks in part to the influence of kids, promises to be a boon to wireless vendors.

"Downloading games is a significant area for us," says Will Souder, director of acquisition marketing for Sprint PCS (nyse: FON - news - people ). "It's growing rapidly."

The mobile gaming market is still a nascent one, but is ready to boom. In 2004, about 10% of all wireless customers in the US--about 18.7 million people--engaged in mobile gaming, according to In-Stat/MDR. By the end of 2005, their numbers should jump more than 45%, to 27.3 million people, and by 2009, there will be 78.6 million mobile gamers--a third of the total wireless customer base.

At the moment, most of these mobile gamers are adults, people who'll play a couple of minutes of a bowling or board game when they've got time to kill in a waiting room or between meetings. But kids represent a significant and growing chunk of the marketplace, and since they spend lots of time and money on games, mobile vendors are eager to draw them in.

"As the games become more sophisticated, as they get beyond the single player download, they'll be taken up more by the younger users," says Gartner analyst Michael King. "[The carriers] are spending a lot to reach them, and they're very excited about the prospects."

Carriers--like Cingular Wireless, a joint venture of SBC Communications (nyse: SBC - news - people ) and BellSouth (nyse: BLS - news - people ), or Verizon Wireless, a joint venture of Verizon Communications (nyse: VZ - news - people ) and Vodafone Group (nyse: VOD - news - people )--make much of their money by selling games for download, usually at a cost of a couple of dollars apiece. Most cell phone handsets come with a game or two built into the system, but they're usually pretty low-tech or limited in scope, so serious gamers usually download their own. Although only 18.7 million people engaged in mobile gaming this year, they made about 82.2 million downloads, according to In-Stat/MDR--an average of about 4 downloads per person.

The mobile service vendors also benefit from a subset of games that allow customers to use their connection to play online, since these services gobble up cellular plan minutes. And just as teenagers are heavier users of their phones than adults, young online gamers rack up bigger bills than their classmates. Only about 8% of teens who have cell phones engage in online gaming, according to research firm Telephia, but they use up significantly more minutes on their mobile plans, averaging about 811 minutes per month versus 407 minutes for their non-gaming contemporaries. They also buy more expensive handsets, paying an average of $94 versus just $71.

This all translates to very big dollars. For 2004, total U.S. revenues from gaming services will reach about $203.8 million, according to In-Stat/MDR. By the end of 2005, they'll jump a staggering 87%, to $382 million, and by the end of 2009 should hit $1.79 billion.

Those kinds of numbers are increasingly attracting the attention of kid-centric companies outside the telecom world. The Walt Disney Co. (nyse: DIS - news - people ) is getting in on the action, producing games based on its movies and characters, as well as licensing out properties from other companies to turn into games.

The demand for games for kids is growing "very, very rapidly," says Larry Shapiro, executive vice president of business development and operations for the Walt Disney Internet Group. "We're seeing significant expansion of the business as there's more color handsets, as there's phones that allow for 3D graphics."

In fact, phone makers are increasingly tailoring their handsets so that they look more like gaming systems than phones. This summer Nokia (nyse: NOK - news - people ) released the N-Gage QD, a phone with a large color screen and built in control pad for gaming. It also supports a wide range of multiplayer gaming, so kids can play against friends locally via short-range Bluetooth wireless, or over the cellular network.

That sort of group play over mobile phones is what's likely to be a killer app for teens in the mobile gaming space. "Kids are looking for things that increase the reach of their community," says Gartner's King. "I think when you start adding things like instant messaging, presence and location, all of the sudden it'll be huge."

Ericsson to Distribute Warner Music Tones

2004-12-01T21:38:00.000-08:00

12.01.2004, 09:38 AM

Looking to expand its offerings to European consumers, Warner Music International and Telefon AB Ericsson said Wednesday they plan to start distributing some of the label's artists music via mobile phone in Europe.

Using Ericsson's mobile music service M-USE, Warner International will be able to distribute some of its most popular artists in as many as 28 markets in Europe, through traditional ring tones, as well as artist logos, autographs and ring tones based on original recordings.

"Warner Music has a very impressive lineup of artists and together with our customers, we will make Warner's music available to mobile consumers throughout Europe," said Hans Vestberg, senior vice president of Ericsson's global services unit. "Ericsson experiences very high demand for our mobile music service M-USE, and with the addition of the great content and promotion opportunities Warner brings to the table, we expect the demand to increase even further."

For Warner, which is part of Warner Music Group, it's a chance to expand its artist roster into new markets, including logos that users could download to use as the background picture on their screen or ring tones that sound similar to a band's latest single.

"We see tremendous potential in the mobile sales channel and in Ericsson we have an ideal partner to help us maximize this opportunity internationally," said Jay Durgan, senior vice president for strategic partnerships and business development with Warner Music.

Warner Music content is already available through M-USE in Austria and Sweden, but the new agreement will expand throughout most of Europe.

M-USE is part of Ericsson's managed services hosting offering, a process whereby Ericsson and various mobile operators work together to market new services to subscribers.

ESPN steps to the plate with MVNO

2004-12-01T13:00:00.000-08:00

By Jason Ankeny
TelephonyOnline.com, Dec 1 2004
http://wirelessreview.com/ar/telecom_espn_steps_plate/

Cable sports network ESPN will launch its own branded wireless phone service next year, reportedly the first in a series of mobile virtual network operator (MVNO) services planned by its corporate parent, The Walt Disney Co.

According to today’s announcement, the service, dubbed ESPN Mobile, will begin operations in 2005 over Sprint’s national network. In addition to voice service, ESPN Mobile will tout applications including sports news and information, commentary and analysis, and streaming audio and video, as well as more traditional wireless apps like ringtones, graphics and photos. ESPN Mobile will additionally sell ESPN-branded handsets, accessories and applications.

ESPN’s entry into the MVNO market has been the subject of much speculation for the last year, during which time the cable network has been working in tandem with management consulting firm AT Kearney in preparation for ESPN Mobile’s launch. "The timing is simply down to the time it takes to establish an MVNO contract with a carrier and to put together back-office support," said AT Kearney vice president and Wireless Practice leader Andrew Cole. "A tremendous amount has to take place before you make everything happen."

Since its 1979 inception, Bristol, Conn.-based ESPN has spawned seven domestic television networks, 25 international networks, ESPN Radio, five Internet sites, ESPN The Magazine and a slew of videogames. Programming extends to 65 different sports, including NFL, MLB and NBA coverage. ESPN’s daily "SportsCenter" newscasts count viewership in excess of 88 million U.S. homes each month.

Just Speechless

2004-12-01T12:00:00.000-08:00

David M. Ewalt, 12.01.04, 3:00 PM ET
http://www.forbes.com/2004/12/01/cx_de_1201kidphone_print.html

OMG! Kids r kit w/ txt @home n mob!

Translation for those who don't speak teenager: Kids use text messaging to keep in touch, whether they're at home or on the go.

The written word is alive and well with today's youngsters, even if it is fairly unrecognizable. Text-based tools rule in youth markets, whether they are PC-based instant messaging programs or the phone-based short message service. As a result, today's kids are more connected than ever--and service providers are raking in piles of dough a few pennies at a time.

"Our most popular service is text messaging," says Dave Garver, executive director of marketing for Cingular Wireless, a joint venture of SBC Communications (nyse: SBC - news - people ) and BellSouth (nyse: BLS - news - people ). "Teenagers engage in some really communications-intensive behavior."

It used to be that teens would dominate the family phone, tying up the line for hours talking to their friends. But today's kids grew up on the Internet and communicate just as readily with text as with voice. They're voracious consumers of communications, used to talking to friends at the drop of a hat, and instant-messaging tools are one of their favorite ways to keep in touch.

At home on a PC, the communications method of choice is instant-messaging programs, such as the free services offered by America Online--a division of Time Warner (nyse: TWX - news - people )--Microsoft (nasdaq: MSFT - news - people ) and Yahoo! (nasdaq: YHOO - news - people ).

These PC-based messaging tools are hugely popular. According to a survey performed by Jupiter Research, a whopping 71% of consumers between the age of 13 and 17 use instant-messaging programs on their computers.

"We feel like IM is the communication medium of choice for the kid generation," says Frazier Miller, director of product management for Yahoo Messenger. Teens were the vanguard for instant messaging and now tend to be heavy users, keeping multiple windows open and conducting several simultaneous conversations with friends. "It's an incredibly fun way for them to maximize their time and to hang out online," he says.

The companies who provide these messaging services are more than happy to exploit kids' text habits. Vendors make the most of their money in the space from advertising displayed on the messaging program's interface. But premium services like custom wallpaper, decorative themes and online games are also taking off. By the end of 2004, total worldwide revenues in the IM market, which include enterprise and consumer segments, will be about $131 million, according to the Radicati Group. By 2008, that total should reach $413 million.

One premium feature that's already popular outside the U.S. is custom avatars, says Larry Grothaus, lead product manager for MSN. Each avatar is a computer-animated person who represents an individual user. Young consumers can buy special clothing and accessories for their avatar, spending more money on virtual outfits even as they spend less on fashion in the real world.

When they can't be near a PC, kids use their phones to trade text. According to the Yankee Group, more than half of all teens between the ages of 13 and 17 are active users of wireless text messaging, sending blurbs using the "SMS" short message service. And since cellular carriers often charge as much as 10 cents per SMS, these communications represent a huge and growing revenue stream. In 2004, revenues from SMS will total $1.5 billion in the U.S., according to research firm IDC. By the end of 2005, they'll surge to $2 billion.

As cellular networks get more advanced, more teens will be using the same IM programs on their phones as on their PCs. Only 29% of kids have phones capable of running those programs right now, according to the Yankee Group, but 11% of teens use them--nearly 40% of the potential user base.

In fact, kids are often the first consumers to try out advanced messaging services, so much so that they are increasingly responsible for teaching their parents about them and getting them to become users. "[Parents] want to stay in touch with the latest technology so they can stay in touch with their kids," says Meta Group analyst Ted Tzirimis. "Since their kids are all using IM for personal reasons, a lot of adults are using it during the day...they can tell them 'do your homework, do your laundry.'" As new services like voice and video messaging get added to the IM programs, it will likely be kids who help promote the emerging technologies.

Kids are such heavy users of messaging technologies that it is likely today's killer Internet app--e-mail--is about to get pushed aside. "As these kids get older, we're going to see IM really take over as the preferred method of communication over e-mail," says Yahoo's Miller. "E-mail is really seen as skewed towards older demographics. Kids will use e-mail to communicate with their parents, but it's seen as very stodgy."

An 'Incredible' Marketing Ploy

2004-11-30T11:55:00.000-08:00

David M. Ewalt, 11.30.04, 2:55 PM ET

The Incredibles has so far racked up over $200 million in U.S. ticket sales, gathered another $60 million overseas, and broken into the top 50 all-time-domestic blockbusters.

But what's really incredible about this animated superhero movie isn't just the box office. It's the way co-creators at The Walt Disney Co. (nyse: DIS - news - people ) and Pixar Animation Studios (nasd: PIXR - news - people ) have marketed the film over mobile devices. Pick up your phone or log onto Disney Mobile, the company's cell-centric Web site, and you can download two dozen Incredibles wallpaper graphics, two new video games and three dozen custom-made ring tones--including one of villain Syndrome growling, "What, you expected a cute little ring?"

It's a clever way to promote the movie--but perhaps just as importantly, it's a strong new revenue stream for both content and service providers. As the cell phone companies have expanded their presence among youth markets, other businesses are discovering that the mobile format is a great way to reach kids, and that these young consumers are willing and able to spend serious money over the phone.

The number of kids armed with cell phones is surprisingly high. By the end of this year, half of all children between the age of 11 or 17 will have their own phone, according to the Yankee Group. They're profitable consumers, too: Kids use more minutes on their cell plans and spend freely on premium, paid services. All told, users under the age of 18 probably account for as much as a quarter of the $100 million a year cellular service market.

It's a big enough market to have attracted the attention of folks outside the telecommunications world who want a piece of the action. The major movie studios have been some of the first businesses to market to kids using mobiles.

"We have content on all the major carriers, and on 40 or so carriers worldwide," says Larry Shapiro, executive vice president of business development and operations for the Walt Disney Internet Group. "I think we are one of the few companies in the space who are in every category, with ring tones, wallpaper, games, data applications...We've been pretty pleased with our success and our balance."

So far, says Shapiro, revenue from mobile products are growing steadily on a month-to-month basis, and "pretty dramatically" year over year. It's likely some of that expansion has to do with the ever shrinking age of cell phone adoption. "We appeal to a relatively broad base of family and kids," he says, "but in some aspects our growth has to do with the expansion of cell phones into the hands of teenagers."

With each premium phone service sold, Disney doesn't just get kids excited about its new movie--it makes money. A videogame download or new ring tone can cost a user several dollars, charged to his phone bill. Content providers share the earnings with the mobile network operator, making these services an attractive--and booming--new revenue stream for both industries.

"It's definitely something we think is going to explode over the next few years," says Will Souder, director of acquisition marketing for Sprint (nyse: FON - news - people ). "It's very difficult to target early teens, you can't do it through traditional mass media, but this is a great way to reach them."

Disney is so enthusiastic about the mobile market that it is getting ready to launch its own cell phone company. For more than a year, company execs have been discussing becoming a "mobile virtual network operator," or MVNO, a model under which a company skips the expensive process of building a national phone network, instead signing on with an existing provider and rebranding its service. A Disney mobile network would allow the company to sell cheap phones, branded with its characters, and provide them with a dedicated, direct marketing channel to kids.

"It's something we're deep into investigation of," says Shapiro of the network. "But it's a complex business and a complex series of parts. You have to figure out how you're going to do customer service, how you're going to manage the network...it's much more complex, but it's definitely interesting to us."

A Disney network would follow the lead of the Virgin Group, which launched its own using the Sprint PCS network in 2002. Virgin Mobile USA targets young adults between the ages of 18 and 24, enticing them with sexy commercials and a content partnership with MTV. The company already has nearly 2 million subscribers, and is reportedly considering an IPO during 2005, which could find the company valued at as much as $2 billion.

Movie makers aren't the only businesses exploring the possibilities of mobile youth. Major record companies are discovering that during an age of dwindling CD sales, cell phones can help them promote bands and even sell more music.

This fall, Verizon Wireless--a joint venture of Verizon Communications (nyse: VZ - news - people ) and Vodafone Group (nyse: VOD - news - people )--sponsored the "Music Unleashed" concert series, a series of performances by popular bands including Simple Plan, Maroon 5 and Green Day. The concerts promoted both the bands and the cellular network, says Stephanie Cairns, associate director of marketing for Verizon Wireless, allowing kids to use their phones to remix the album, chat live with the band, or download unique content from the actual concert they attended.

But even more important to the record companies is the ring tone market. Kids pay around $1.99 a pop for downloadable ring tones of their favorite songs--a market the Yankee Group forecasts will hit $1 billion in U.S. sales by 2008.

Ironically, these are the same kids who have stopped buying CDs and other recorded music, and who balk at logging onto the paid-download music services. Creating mobile content may be the only way record companies can squeeze revenue out of young consumers, says Ross Rubin, director of industry analysis for market research provider NPD Techworld.

"The kids are snapping up these ring tones," says Rubin. "They'll spend $2 for a ring tone when they would rather comb the file-sharing networks for hours rather than pay for a 99-cent single."

Ericsson Lands 3G Deal With NEC

2004-11-30T11:50:00.000-08:00

By Susan Rush
November 30, 2004
http://www.wirelessweek.com/index.asp?layout=newsat2direct&starting=5&pubdate=11/30/04

NEC is calling on Ericsson to deliver 3G mobile platforms for its upcoming set of next-generation W-CDMA/GPRS handsets.

As part of the agreement, Ericsson will initially supply its Ericsson U100 platform, a platform that has been launched in an estimated 30 percent of the world's W-CDMA products, according to Ericsson figures.

"With addition of Ericsson Mobile Platforms to our portfolio, NEC will be ready to offer a wider range of 3G mobile terminals to meet the various demands of 3G mobile operators and end users in a timely manner, in response to the wide variety of services and functions required, as the 3G market and services grow and expand globally," said Yoshiharu Tamura, senior general manager of NEC's Mobile Terminals Operations Unit.

Although terms of the deal were not disclosed, the first NEC handsets using Ericsson platforms are expected to hit the market no later than September 2005.

Nextel adjusts only pricing claims in ads following watchdog review

2004-11-30T11:15:00.000-08:00

By Dan Meyer
Nov 30, 2004

Nextel Communications Inc. was able to support marketing claims for its Nationwide Direct Connect service, but modified pricing claims following a ruling by the National Advertising Division of the Council of Better Business Bureaus Inc.

NAD said the case was brought to the attention of the self-regulatory forum by Verizon Wireless and challenged a Nextel advertisement in the Newark Star Ledger on June 3 claiming that its $50 Direct Connect "Free Incoming" plan includes "Unlimited Push to Talk Walkie-Talkie" calls "Across Jersey. Across the Country." Verizon Wireless argued that the advertisement was inaccurate because there were no qualifiers or disclosures of the material terms and conditions in close proximity to the price and service claims.
continued below

Verizon Wireless argued that the "coast-to-coast" claim for Nextel's Nationwide Direct Connect service was inaccurate in that there was no text disclosure alerting consumers to the fact that Nextel's PTT service was available to only about 82 percent of the U.S. population.

Citing a previous NAD decision regarding Qwest Communications International Inc., Nextel claimed its coverage supported the coast-to-coast claim in that it provides service in every state along the Pacific seaboard and serving 96.27 percent of the population on the Pacific Coast as well as every state along the Atlantic seaboard and serving 92.43 percent of the population on the Atlantic Coast. Nextel also asserted that its network along with affiliate Nextel Partners Inc. reaches approximately 252 million people or nearly 88 percent of the total U.S. population.

Despite Verizon Wireless' assertions, NAD found that Nextel's coast-to-coast coverage claim for its Nationwide Direct Connect service was supported based on the "significant geographical and population coverage of the advertised service."

Verizon Wireless also claimed that the advertisement included the phrase "Across Jersey. Across the Country" but did not include the $10 additional fee required to access Nationwide Direct Connect in the $50 per month rate plan associated with the advertisement. In addition, Verizon Wireless claims the advertisement did not plainly describe what was included in the "unlimited push to talk walkie-talkie" calls, that only include incoming PTT calls or if the outgoing PTT call is made to someone within the user's region.

NAD determined that Nextel's pricing claim was confusing with respect to the PTT service and that the disclosure information provided was inadequate. NAD recommended that Nextel "more accurately explain the services that are included in the monthly fee in a clear and conspicuous manner."

In a statement to NAD, Nextel said it was pleased that the forum found its coverage claims to be substantiated and that it has already implemented recommended changes.

NAD recommended in a case last month brought to its attention by Nextel that Verizon Wireless modify its "anytime, anywhere" claims for the carrier's "In-Network" calling plans to avoid consumer confusion.

Nextel drops WiMax from wireless broadband wish list

2004-11-30T10:57:00.000-08:00

By Ben Charny
http://news.com.com/Nextel+drops+WiMax+from+wireless+broadband+wish+list/2100-1039_3-5471329.html
Story last modified Tue Nov 30 10:57:00 PST 2004

Nextel Communications says it no longer considers wireless wunderkind WiMax a future option for mobile broadband service, a rare blow to a technology backed by major tech heavyweights.

The reason? WiMax isn't yet ready for the rigors of delivering broadband to people on the move, Nextel spokesman Aaron Radelet said Tuesday. That's why the nation's fifth-largest cell phone service provider favors either the same cell phone equipment Verizon Communications uses to sell broadband now in 20 major markets, or even faster but lesser-known wireless equipment using Flarion Technologies' FLASH-OFDM technology, a spokesman for the carrier said.

WiMax is radio technology that promises two-way Internet access at several megabits per second, with ranges of several miles. Backers of the technology believe it can challenge DSL and cable broadband services because it offers similar speeds but costs carriers less to set up, since installation doesn't require roads to be torn up.

The technology is expected to be particularly useful at getting broadband service to remote areas economically or physically out of read of conventional wired networks, but Nextel says it won't be adequate for devices on the move.

"What Nextel is looking for is a mobile solution. Mobility won't be built into the WiMax standard for another couple of years," said Kendra Petrone, a spokeswoman for the WiMax Forum, which represents commercial WiMax interests. "Nextel is pushing ahead and not waiting for WiMax."

Nextel's decision is a reminder that while WiMax holds great promise and has broad industry support from the likes of Cisco Systems, Intel, Fujitsu Microelectronics America and others, its still in the early stages of development, and that services based on the technology probably won't be available until the end of next year.
Digital agenda

Regardless of its technology choice, Nextel Communications expects to have a nationwide wireless broadband network in place by late 2006, at the earliest, leaving it badly trailing its competitors. Cell phone service providers have spent billions of dollars building high-speed wireless networks so that they can sell new services such as high-speed Web access, network gaming or wireless access to office e-mails. The carriers are trying to find new sources of revenue because of a competition-driven plunge in the price of their main product: phone calls.

Verizon Wireless already has 70,000 wireless broadband subscribers and plans to double the number of areas where BroadbandAccess is available by the end of 2005. Nextel will also be competing with AT&T Wireless, which has a wireless broadband network in six cities and Sprint, which intends to launch high-speed Net services in two Midwest cities by year's end.

Wee Wireless Warriors

2004-11-29T12:00:00.000-08:00

David M. Ewalt, 11.29.04, 3:00 PM ET
http://www.forbes.com/2004/11/29/cx_de_1129kidphone_print.html

In the past, telecom for kids didn't get much more complex than two tin cans connected by a length of string.

But times have changed. Children have become voracious consumers of cellular communication and today are the fastest-growing and most profitable segment of the mobile telephone world. As the overall cellular marketplace nears saturation, young consumers are bringing new blood--and new bucks--to service providers.

"Kids are a very important market for us," says Will Souder, director of acquisition marketing for Sprint PCS (nyse: FON - news - people ). "We're reaching full penetration levels for the 25 to 55 age group, but families are giving more phones [to kids], and the age at which people are adding on is getting younger and younger. It goes all the way down into single-digit ages now."

The phenomenon of kids with cell phones is relatively new. Back when cell phones were costly and clunky, it would have been practically unthinkable to give one to a preteen. But with today's cheap--or free--handsets and low-cost calling plans, many parents are handing their kids phones in an effort to stay in touch and keep track of their whereabouts.

Just four years ago, the percentage of kids who had cell phones was in the single digits. But by 2003, about a third of all kids between the ages of 11 and 17 owned their own cellular phone, according to the Yankee Group. By the end of this year, ownership in that age group will have jumped to over 50%.

Sure, it's still a small number of consumers compared to the overall market. Over 170 million people subscribe to cellular service in the U.S., and nearly 80% of consumers between the ages of 25 and 54 have a mobile phone, according to the Cellular Telecommunications and Internet Association. But success can be a curse, and the industry is running out of people to whom it can sell phones.

"If you're looking for new users, the only place to find them is among young people," says Dave Garver, executive director of marketing for Cingular Wireless, a joint venture of SBC Communications (nyse: SBC - news - people ) and BellSouth (nyse: BLS - news - people ). Most adults can only be brought on board if you convince them to switch from another service provider, he notes. By contrast, plenty of kids still don't have service, and every year more and more kids come of age.

"All said, there are about 81 million people between the ages of 5 and 24 years old, and that segment is growing at a clip of about 10% a year," says Garver. "Just the sheer size of it makes it a group of people you can't ignore."

What makes the youth market particularly attractive isn't just its size but its spending habits. Kids talk on the phone more than adults, thereby racking up bigger bills. They pay around $1.99 a pop for downloadable ring tones of their favorite songs--a market the Yankee Group forecasts will hit $1 billion in U.S. sales by 2007. They send billions of short message service texts to one another, racking up fees of around 10 cents a message. They also download games, use instant messaging applications and browse the Web.

"These consumers are so comfortable with digital data," says Ross Rubin, director of industry analysis for market research provider NPD Techworld. "They're using these services on their PC, and, as they go mobile, it's natural for them to look for them on their cell phones."

And kids use their influence to get older, less cutting-edge consumers to start using those features as well. "We hear countless stories about young adults who send a text message to their parents and teach them all about it," says Stephanie Cairns, associate director of marketing for Verizon Wireless, a joint venture of Verizon Communications (nyse: VZ - news - people ) and Vodafone Group (nyse: VOD - news - people ). "Then that becomes a way for the parent to keep in touch with their child." Kids also help their parents decide which handsets to buy and which service providers to use.

The cellular service providers won't say how much of their income derives from users under the age of 18. But the wireless industry today is nearly a $100 billion dollar business, and it's probably fair to assume that as much as a quarter of that revenue comes from young consumers.

For now, most of these tots are having Mom and Dad foot the bill, using a phone covered under a family mobile plan. But some kids take the matter into their own hands.

"At around the age of 16, a lot of teenagers begin to take control of their wireless spending," says Garver. "They begin working and they have some income." Since service providers won't allow anyone under the age of 18 to sign a contract, these consumers buy prepaid wireless service, purchasing chunks of talk time with a credit card or buying phone cards in retail chains.

It's a cheap and easy, no-commitment way for a kid to get mobile--and it's increasingly popular. In July of 2002, the Virgin Group and Sprint PCS jointly launched Virgin Mobile USA, a cellular network specifically targeted at consumers between the ages of 18 and 24. The company has since surged into the top ten of U.S. mobile providers, and now boasts more than 1.8 million subscribers. Boost Mobile, a division of Nextel Communications (nasdaq: NXTL - news - people ), has also found success with this strategy.

As a result of the increasing popularity of mobile phones, young consumers are spending less on traditional diversions like music and fashion and shifting their attention to the mobile world. "They're focusing more of their income on phones," says Rubin. "That's the new fashion."

All we want for Christmas ?

2004-11-29T11:56:00.000-08:00

Sunday Herald - 28 November 2004
http://www.sundayherald.com/46308

Mobile phone operators are spending millions on advertising campaigns designed to persuade consumers and businesses to buy into the next generation of technology this Christmas. Having spent £22 billion on the licences it may be make or break time for some. Iain S Bruce reports

It’s been a long, long road for Joe Barrett. A front row witness to one of the technology industry’s most humiliating scenes, Nokia’s former head of 3G marketing watched from the wings as the third- generation mobile services debacle unfolded.

Britain’s networks poured staggering amounts of money into buying the 3G licences and were then forced to stand by as the sector’s great white hope plunged from one disaster to another, singularly failing to materialise as the space age service it was supposed to be.

“Right from the start everyone could see the potential of third- generation mobiles, but while the market wanted immediate answers the technology simply didn’t mature as quickly as it could,” Barret says. “It has been a long, complex process where the reality has failed to match the hype and that has undoubtedly had a significant negative impact upon the entire sector.”

Barrett, who is now heading up the European operation of mobile broadband provider Flarion, says: “Yet today many of the questions have been answered and the challenges met. It may have been a long time coming, but 3G is finally rolling and ready for action.”

Injecting fresh impetus to a new wave of telephony products, Britain’s mobile network providers are poised to hurl everything they have into a concerted push to promote a rapidly expanding pantheon of 3G services that embraces everything from stock markets to pop culture. The long-awaited release of compatible handsets from LG, Motorola and NEC has at last enabled early entrants 3 to tempt the public with a suitably varied platter of phones to choose from. Vodafone, MM02 and T-mobile have launched competitor services and earlier this month Orange pledged to unleash its own offering in 2005.

The next generation of mobile phone technology, 3G offers users a wide range of high-speed mobile services, including video-calling and messaging, e-mail, games and news and information services. The major mobile phone companies spent billions of pounds at the beginning of the decade securing licences enabling them to offer such services in the UK, but technical problems have led to delays in launching. Setting up the networks necessary to support 3G services proved to be an expensive business and at many points it looked almost as if the major players where on the point of giving up the ghost, but as any insider will tell you, that was never really an option.

“3G launched too early with unfulfilled promises, and offered expensive services on handsets that were often inadequate at best,” says Robert Vangstad, vice-president of Ericsson spin-off Mobeon. “As a result, it is no wonder that 3G is viewed with scepticism by everyone involved, apart from the operators who desperately need some return on their hefty investment.

“However, 3G is badly needed to meet the growing demand for remote access to high-definition data at fast speed, and will become a success as long as it is offered and serviced appropriately. It is currently still expensive to call over GSM networks and there is a desperate need for better capacity to deliver data.”

Britain’s existing mobile infrastructure is buckling under the strain, swamped with a devastating deluge of voice traffic it simply wasn’t designed to handle, and only moving to a new set of technologies and protocols can provide the capacity that current usage demands. At the same time market pressures mean that the amount providers can charge for mobile calls is steadily decreasing, creating a situation where the only way the industry can go is forwards.

“We have invested significantly in 3G because it will enable the business to grow profitably and enable us to deliver new and exciting mobile entertainment and communication services,” says Vodafone spokeswoman Louise Kingham.

“With the greater capacity and efficiency of 3G networks compared with 2G networks, we’ll be able to offer more voice minutes, deliver an increasing array of information and entertainment whilst on the move. It will also enable business customers to work more productively when out of the office through easy and fast access to mobile business applications.

“In short, we will increasingly be able to offer many of the services we use now through a fixed access point, like a PC, games console or a TV through a mobile device.”

It is quite a dream, and it’s one that is increasingly becoming a reality as every new month brings fresh additions to the range of eye- catching services on offer. Earlier this month Robbie Williams’s video for the single Misunderstood was released exclusively upon Asian conglomerate Hutchison Whampoa’s 3 network, part of a high-profile consumer campaign that has also seen the makers of the high-tension television series 24 commissioned to produce a series of one-minute dramas aimed at promoting 3G’s much vaunted video capabilities.

Similarly, Vodafone’s 3G consumer service enables customers to video call, video message, download 3D games, watch football clips, get tracks from the world’s leading artists and receive a whole range of entertainment and information whilst on the move.

A whole new kind of customer experience, it may not have happened overnight but the company expects to attract 10 million subscribers by March 2006, each one of whom is expected to generate a per-head turnover that is at least 7% higher than today’s average.

Yet despite such confidence, the jury is still out on a technology with many barriers left to climb. According to the latest research revealed by analyst ARC Group, global sales of 3G handsets are still very weak in all regions – forming only 4% of total worldwide mobile handset sales in 2004 – and are not expected to pick up before 2006. For feature-rich devices to gain a foothold and for 3G adoption to take place on a mass scale, the report claims, operators and handset manufacturers must understand the consumer groups they are targeting. The need to gain insight into the consumer’s buying behaviour makes customised handsets, relevant content and audience-specific marketing essential.

Unfortunately, given commercial disasters such as WAP – the internet-on-your-mobile service that actually turned out to be more like a handset-delivered teletext offering which didn’t work. And considering the fact that SMS text messaging was around for a full 10 years before the networks realised that anyone might want to use the service, it could be argued that the mobile sector has never successfully marketed anything other than voice calls. It has a track record of disaster, and certainly there are those who believe that by focusing upon the consumer, many in the industry are looking at 3G the wrong way.

Brad Weinert, vice-president of business development at Novatel, says: “It is too early to see massive consumer demand. Only when carriers start producing smaller handsets will they adopt in numbers and that is at least six months to a year away from now.

“Business is the key market here. Any industry that requires staff to regularly work outside of their office can benefit from wireless broadband access, and that is where the focus should be.”

This time, however, it seems that Britain’s major players are not going to be caught completely flat-footed. Operators are recognising the logic of a scenario where sales executives can stay connected to clients, legal consultants can access business critical information and finance professionals can maintain a high level of customer service and responsiveness anytime, anywhere. So MMO2, Orange, T-mobile and Vodafone have all concentrated on launching plug-in cards serving the business mobility market before putting too much effort into cosying up to the consumer base, with the latter reporting that some 130,000 have already signed up.

After a very shaky start, the 3G revolution is finally under way, but many barriers still lie in wait that could hinder progress.

Coverage is hardly universal and for customers in Scotland it is still only a reality in the central belt, while doubts exist as to the services’ reliability, with many industry commentators warning that unless quality, speed and availability can be guaranteed, today’s highly-expectant customers will fail to sign up in the vast numbers required.

“It’s certainly an exciting time for the mobile industry,” says Netonomy’s Andy Holcombe. “Both 3 and Vodafone are up and running with their 3G offering and the other major operators are clamouring to be next. But with the fickle consumer ever-ready to move from one operator to another, and operators’ call centres at bursting point, customer service standards could make or break operators’ 3G success.”

That said, the need for greater capacity and reduced costs, not to mention the billions already invested, means that the sector simply has no option but to make 3G work.

The world of television has inexorably migrated from analogue to digital despite considerable misinformation, suspicion and hoo-ha. And the evolutionary process demands that the humble handheld makes the same journey irrespective of what is said or done and certainly, the major players believe that the technology will gradually be est ablished as the only communications protocol in town.

“You have to remember that these are early days – 3G licences are typically 20 years in duration and we believe that the customer’s appetite for a new generation of services provided across faster networks is certainly out there,” says Kingham. “With more consumer and business services moving to the mobile world, mobile revenues will continue to grow, enabling profitable future growth.”

Cingular Sheds Some Spectrum

2004-11-29T11:35:00.000-08:00

By Susan Rush
November 29, 2004
http://www.wirelessweek.com/index.asp?layout=print_page&doc_id=1340002254

Cingular Wireless is working diligently to comply with parameters set forth in regulators' approval of its merger with AT&T Wireless. The latest: The carrier has sold certain assets to MetroPCS and Alltel.

In its $230 million deal with MetroPCS, Cingular will fork over 10 MHz of wireless spectrum in Dallas and 10 MHz in Detroit.

When the FCC approved the Cingular buy at the end of October, the commission mandated that Cingular and AT&T Wireless must divest spectrum or operating units in 22 local markets. The commission said that the combined entity could hold a maximum of 65 MHz of spectrum in Detroit and 70 MHz in Dallas -- which would require the divestiture of 10 MHz of spectrum in each market. The deal with MetroPCS is designed to satisfy that requirement.

Separately, Cingular forged a deal with Alltel to sell former AT&T Wireless properties - including licenses, network assets and subscribers -- in Oklahoma City and Grant, Okla.; Sherman-Denison and Jack, Texas; Owensboro and Fulton, Ky.; Litchfield, Conn.; and Yaolbusha, Miss. As part of the $170 million deal, Cingular also will sell 20 MHz of spectrum and AT&T Wireless network assets in Wichita, Kan., as well as spectrum in several Georgia and Texas counties.

Cingular will gain some spectrum as part of a swap agreement between the two companies as well, with Cingular acquiring some interests in Wichita; Kansas City, Mo.; Milwaukee; and Texas. As part of the swap, Alltel will build up its presence in Michigan, northern Louisiana and Toledo, Ohio.

The MetroPCS and Alltel deals are both subject to regulatory approval. Cingular expects to close the transactions in the first quarter of 2005.

Making Over Motorola

2004-11-29T10:43:00.000-08:00

Elizabeth Corcoran, 12.13.04
http://www.forbes.com/forbes/2004/1213/102_print.html

If mobile communication is going to be seamless, Motorola has to be seamless.
Edward Zander always wanted to be in charge. After 25 years in high technology, including five years as a prominent second banana at Sun Microsystems, Zander got his wish. In January he became chief executive at Motorola, a fallen angel of mobile communications. It used to own the business. It doesn't anymore.

Five weeks after Zander's arrival at the Schaumburg, Ill. head office, he figured out what being boss of a technology company is really all about: 10% technology, 90% diplomacy. He was sitting in the Reston, Va. offices of Nextel, Motorola's biggest customer. Timothy Donahue, Nextel's chief executive, bluntly told him that Motorola was still acting like a monopolist, long after Nokia, Ericsson and Samsung had taken most of the business. Donahue told Zander that Motorola's products were late and their quality was shoddy. Motorola's divisions were not cooperating with one another; Nextel's people had to work overtime to track down three or four Motorola executives in different divisions to get input on a new project.

Zander took copious notes. Minutes after he left Donahue's office, he turned to his chief information officer and made him personally responsible for the Nextel account. These days Motorola is back in Nextel's good graces. "Motorola people are working hard to solve issues for us," Donahue says, with grudging approval.

This kind of meeting took place again and again over Zander's first three months. "Each meeting was like, five or ten minutes of making nice, then they beat the crap out of me," Zander says.

When Zander got to Motorola, he brought plenty of spunky optimism and a sure grasp of technology. But he quickly realized Motorola desperately needed something more from him: to learn to cooperate. His many years of watching the egos of founders-turned-chief-executives run amok had burned into him a deep belief in the power of teamwork. The day of the chief executive as Lone Ranger is over at Motorola.

From the moment Zander took the job, analysts have been clamoring for Big Moves: a layoff, a sweeping reorganization. The advice irks him. "I've got to live in the house first," he has insisted.

He has overseen one divestiture planned before he arrived. In July, Motorola sold 40% of its semiconductor group in the public market and was scheduled to distribute the rest of its shares Dec. 2, making Freescale Semiconductor freestanding. That leaves Motorola with 65,000 employees in five divisions--phone handsets, base stations, walkie-talkies, automotive electronics and broadband. There are hints that Zander will reshuffle divisions with an eye toward improving the company's internal mechanics, streamlining manufacturing, procurement and its own technology infrastructure. The idea is to present a single face to customers. Zander has laid off only 1,000 this year--so what if that leaves Wall Street analysts cold.

At least his timing has been lucky. Two weeks into the job Zander announced Motorola's first strong quarter since the telecom bust. If Motorola continues to sell pallets full of its sleek new Razr V3 camera phone, 2004 could be its most profitable year ever, with a $1.9 billion net, up threefold from a year ago, on $36 billion in revenue.

But the real test for Zander is subtler than getting the latest cell phone into Santa's sack: The man who spent years in the shadows of founder-bosses must get Motorola out from under the shadow of a family dynasty that began 76 years ago with Paul Galvin, who coined the term "Motorola"when the company started selling car radios, and ended last year with the departure of his grandson Christopher.

The technology vision here is a simple one: what Zander calls "seamless mobility." On the podium and to customers, Zander promises that Motorola will pump data--voice, music, video, whatever--anywhere and everywhere people go. Communications gear in the office will smoothly hand off data to a car or through the home. "The next ten years isn't about the personal computer anymore," says Zander. "The PC isn't going to control my home. This thing [the cell phone] will control my house. It's not a phone, it's how you move through the environment."

Within Motorola, seamless mobility means that Zander must dismantle a society that longtime Motorolans once described with pride as one of "warring tribes." Motorola's divisions, from the group building cell phones to those making automotive electronics and cable set-top boxes must collaborate as fluidly as the technologies they are promising to build, Zander insists. "If you understand only one thing about our evolving culture, let it be this one," Zander wrote in one of his weekly e-mails to employees. "You work for this company … not just your sector or your country office. To offer seamless mobility, we must tear down artificial barriers between our technologies, products and customers. We, too, must be seamless."

Motorola practically invented whole industries, including two-way radios and cellular phones. That meant, points out ten-year veteran Warren Holtsberg, who runs the company's venture capital arm, that Motorola lacked healthy competitors. So competition turned inward, especially in the reign of Robert Galvin, Paul's son, who ran the company from 1959 to 1990, followed by three longtime Motorolans. "Bob Galvin created an environment where people inside Motorola would push one another," Holtsberg says. It became a company of silos, where success was measured against the fortunes of other divisions.

By the time Chris Galvin began his brief and disappointing stint, Motorola had plenty of fearsome competitors--Nokia in mobile phones, Cisco in networking equipment and Intel in chips--but was still caught up boxing its own shadows. Its share of the handset market slid from 54% in 1995 to 11% in 2000. In microprocessors it never matched Intel's relentless growth. Motorola poured $2.6 billion over ten years into a satellite system, Iridium, which went bankrupt in 1999.

Silos created redundancies. As recently as 2001 Motorola had 176 data centers and 44,000 suppliers. As much as $3.7 billion in supply purchases did not go through a procurement discipline; some employee just made a phone call.

When the telecom bubble popped, those inefficiencies hit the bottom line. In 2001 Motorola reported a $3.9 billion loss. Chris Galvin axed 60,000 of 150,000 jobs.

Mike S. Zafirovski, a 24-year General Electric veteran hired in 2000 to reignite Motorola's handset sales, became president and rolled out quantitative tools to cut product glitches and improve customer satisfaction. But in mid-2003 Motorola had to concede it could not deliver its promised camera phones in time for the holidays. The stock market valuation sank to $20 billion from a high of $130 billion in March 2000. In September Galvin said he would leave.

Zafirovski was the front-runner on the inside. His disciplined moves were beginning to right the company's finances. Plans were moving swiftly to consolidate the data centers down to 11 and trim suppliers to 33,000. Zafirovski pledged that quality improvements and procurement efficiencies would save $3 billion between 2003 and 2005. Market share in handsets started to rebound. It's now 13.9% worldwide, well behind Nokia and a nose ahead of Samsung.

But while the board considered Zafirovski, it also thumbed through recruiters' black books and found Zander.

After stints at computer makers Data General and Apollo Computer, Zander spent 15 years at Sun Micro, rising to president in 1998. In early 2002 Sun's cofounder and chief executive, Scott McNealy, told Zander he had no plans to retire, and Zander left. He spent nine months as a homebody before joining private equity firm Silver Lake Partners.

Zander was heading to Boston last autumn when he was invited to dine with Motorola board members John Pepper, Procter & Gamble's former chairman, and H. Laurance Fuller, former chairman of BP Amoco. "I walked in there like I didn't really care [about the Motorola job]. I just wanted to meet these guys because they were pretty interesting guys," Zander recalls. But he did his homework, studying Motorola's finances and chatting with friends who knew Motorola well.

Pepper was smitten with Zander's energy and technological expertise. Toward the end of dinner, Pepper asked the $40 billion question: "What do you think Motorola stands for?"

As he chewed on his fish, Zander glanced at the table where he had put his cell phone, a Motorola model with the batwing "M" logo.

"John, it's right here--this ‘M,'" Zander said. "It stands for ‘mobility.' You ought to own mobility."

To Pepper, who had spent his career building some of America's most famous brands, Zander's answer was sweet. Zander, he decided, would be a breath of fresh air for Motorola, which had never had a chief who had not worked at the company for at least a decade.

When the offer came, Zander's wife of 32 years, his two grown sons, his sister, his brother and his mother all weighed in. They all told him to take it.

On Jan. 5, a week before his 57th birthday, Zander experienced his first culture shock. After years of working in spartan Silicon Valley offices, he walked into a 12th-floor office that was cavernous and ornate, with antique furniture and paisley pillows. "Holy mackerel. What am I going to do?" Zander recalls thinking.

He penned a weekly companywide e-mail, teasing Motorolans about the weather. "Hello from the frozen tundra," he wrote in February. "Can it possibly get any colder? My hats now have to wear hats." He invited executives over to his Chicago apartment to watch The Sopranos and munch pizza.

On his first day Zander jotted down points he wanted to impress on his new colleagues. High on the list: "Team runs the company; not me, not the board."

Two weeks after arriving at Motorola, Zander convened a two-day meeting of 18 senior executives. Although most division heads had met before, past meetings were more like classroom book reports: One after another, executives would run through long PowerPoint presentations summarizing results. Never had they jointly planned future strategy. Zander wanted something more like a family powwow. As the caterers brought in lunch, Zander pulled out his wallet. "We're all paying for this lunch," he declared. Everyone chipped in.

When division heads reeled out their revenue forecasts for the coming quarter, Zander stopped them with a question. "Are these commitments?" Zander asked. "This is forecasting," one executive replied. "Pick whatever word you want, but I'm looking for commitments," Zander retorted. "The numbers that you tell me today are your commitments for the quarter."

Zander's message: Running a business is not about wishful thinking but about delivering. "That was very different from the past," observes Gregory Brown, president of the division selling walkie-talkies and other communications gear to law enforcement and industrial customers. "Ed is crystal clear when he says there's a difference between numbers you aspire to and something you will do."

In the past, executives' bonuses were keyed more to the performance of their individual divisions than to that of the corporation. Zander flip-flopped the formula; company performance counts more now. "Customer satisfaction" was one element, a squishy one, in the old system. Zander cut the squishiness. Each executive has measurable goals for customer satisfaction.

Under Zander, every one of the top 15 division executives is personally responsible for two or three customers. They have more time for such engagements now because Zander has insisted they cut out the lengthy slide-show presentations that had become an art form at the company. The message:skip the window dressing and get to work.

In one recent meeting, Zander interrupted with a question. "Let me take you back three slides," replied the executive.

"I saw that slide," Zander interjected. "Let me ask the question in a different way. What's the essence of your strategy? Why will you be successful?"

"Let me take you to an earlier slide," the executive replied.

"Shut the projection off!" Zander retorted. "I just want you to tell me in your own words: Why are we going to succeed?"

Zander is holding plenty of customers' hands himself. As Cingular's chief operating officer, Ralph de la Vega worked overtime to finalize the company's acquisition of AT&T Wireless. The last thing he needed was problems with Motorola phones. Early in the year, he says, "we were concerned about some of the quality issues and the timeliness of the product deliveries." To assuage those concerns, Zander visited Atlanta repeatedly and set up fortnightly phone calls with de la Vega.

The real test, however, came during the summer when Cingular ran into problems with some Motorola handsets. All the components worked fine on their own but froze when plugged together, threatening to derail the planned rollout of phones.

"It would have been easy to say, ‘Oh, that's a component maker's problem,'" de la Vega says. Instead, "Motorola worked day and night, even through the weekend, to find different components." Weeks before the merger was consummated, all the Motorola products were working fine.

To pull together a future strategy for Motorola, Zander is leaning heavily on his chief technology officer, Padmasree Warrior. "We literally started it on the back of a piece of paper," Warrior says, while traveling to meet customers. "We started talking about what was changing in people's lives." In the past Motorola had built technology for a particular place: phones for the car, the home, the office. Now, she says, it's going to serve up technology that matches people's living, delivering services without interruption no matter where they go.

At the company's shareholder meeting in June, Zander unnerved financial analysts accustomed to Chris Galvin's no-nonsense style by conducting a demo of upcoming technology in a room decked out like a nightclub. Clad in an Italian-designer blazer, Zander waved a Motorola phone with surround sound in one hand and an iPod from Apple Computer in the other. "I love my iPod," he said. "It would be great if we could just figure out a way to bring these two devices together." Presto--the beaming face of Steve Jobs appeared on a huge video screen behind Zander. Together they broke the news about a slate of Motorola phones, due next year, that will download and play iTunes.

Nokia is unleashing 40 new handsets next year; Samsung just introduced a phone with a 5-megapixel camera that can store 100 minutes of video. But carriers are giving neo-Moto a close look. Dallas-based MetroPCS is striking its first deal with Motorola after three years of offering Nokia and Korean-made phones. After years of "stale" products, Motorola's phones are now "stacking up against Samsung," says Braxton Carter, a MetroPCS vice president.

Another rollout is taking place on the 12th floor. By Christmas, reconstruction of the executive suite should be done. The private bathrooms and antiques will be gone. Zander's office will be no bigger than anyone else's. "All my life, I've always believed that you shine through your people," says the boss. "I wish people had never heard of Ed Zander. Just Motorola.".

New Strategy Officer feels Nokia long-term strategy is spot-on

2004-11-25T12:00:00.000-08:00

High-tech guru Tero Ojanperä feels his lack of management experience is not a problem
By Marko Junkkari
http://www.helsinginsanomat.fi/english/article/1101820791231

When the subject of the interview turns to technology, Tero Ojanperä, who will soon take over as the Chief Strategy Officer of Nokia, and who is to join the company’s Board of Directors, becomes visibly more relaxed. "The introduction of 3G is in good shape", he says.

The sentences of the man who had been the head of Nokia’s Research Centre are full of technical information on radio frequencies and digital convergence, and peppered with abbreviations containing four or five letters, such as HSDPA, CDMA, HSUPA...

It has been a busy week for Ojanperä. He has given numerous interviews after Monday’s anouncement that he would take over as Nokia’s Chief Strategy Officer, replacingMatti Alahuhta, who is taking the post of CEO of Kone.

On Wednesday Ojanperä was in India on a work-related visit, and he gave a telephone interview in a car while en route from one meeting to another.

Ojanperä is clearly more cautious when asked about topics related to his new job. "No great changes are in store for previously defined strategies and priorities", he says cautiously. In every interview he has emphasised the importance of continuity.

It is hard for a new administrator to start by criticising previous decisions, and he does not necessarily even want to do so. According to Ojanperä, Nokia’s long-term strategy has been correct.

The market leader of the mobile telephony branch has been the engine of product development in the field, and has promoted digital convergence - that is, how digital devices such as the mobile phone, personal computer, game console, television, and the MP-3 player are coming close together.

This year has been difficult for Nokia; the company has not responded to the rapid changes in the field quickly enough. There are gaps in Nokia’s product range, and the company lost much of its market share to competitors in the early part of the year. By the late spring Nokia seemed to have brought the slide to an end.

"In a rapidly changing field, strategy has to be constantly re-examined", Ojanperä says. A few weeks ago Nokia announced that it was cutting its input into research and product development. Ojanperä says that this meant primarily a move to stimulate R&D activities. The new products and innovations need to reach the market more quickly.

Ojanperä will not speculate on how much the efforts at efficiency will lead to cuts in Nokia’s R&D personnel. "That is not the issue, but rather the development of people’s competence", he says.

Born in Korsnäs, near Vaasa, and raised in Vihanti, Ojanperä has a strong background in technology.

He graduated as an engineer in electrical engineering at Oulu University in 1991. He wrote his engineer’s dissertation for Nokia.

In 1999 he defended his doctor’s dissertation on third generation mobile phone technology at the University of Delft in The Netherlands. He has been often praised as one of the world’s top experts on 3G technology.

In 1998, along with Ramjee Prasad, he published a book Wideband CDMA for Third Generation Mobile Communications, which is considered a basic work of 3G technology.

Although the book is completely unintelligible techno-gibberish for the layperson, it has sold surprisingly well.

"We got a certificate from the on-line bookstore Amazon for high sales", Ojanperä reveals.

While at Nokia Ojanperä has worked with the Mobile Phones unit, as well as Nokia Networks. From the point of view of his own career he feels that it was important for him to be closely involved in the 3G standardisation process in the mid-1990s.

After Ojanperä’s appointment, analysts praised his technological know-how, but criticised his scant experience in strategy and business questions. Ojanperä himself does not see this as a major problem. "Nokia is a technology company. Both are needed", he says.

Actually, he does have strategy experience, as he has been involved in the strategic planning of Nokia’s management team for a few years. He also has management experience from the Nokia Research Centre, where he had 1,200 subordinates in six different countries.

Defining his management philosophy brings Ojanperä a few problems. "It is difficult for a person to evaluate that himself", he says. "I’ll try to be a good manager: honest and fair."

Helsingin Sanomat / First published in print 25.11.2004

Verizon Wireless Buys More 1.9 Spectrum

2004-11-24T09:43:00.000-08:00

By Susan Rush
November 23, 2004
http://www.wirelessweek.com/index.asp?layout=newsat2direct&starting=1&pubdate=11/23/04

Verizon Wireless once again is opening its purse to beef its network capacity. The latest: The carrier is buying spectrum in Pennsylvania.

Under the terms of the deal with NTELOS, Verizon Wireless will pay $15.5 million for 10 MHz of spectrum licenses operating in the 1900 MHz frequency. The licenses cover a population of 2.1 million in the areas of Harrisburg, Lancaster, Reading and York.

'We are always looking for spectrum opportunities at the right price,' says Verizon Wireless spokeswoman Nancy Stark. 'We [purchase spectrum] so we can meet our increasing demand for both voice and data services.'

Stark says Verizon Wireless snapped up the Pennsylvania licenses because the spectrum was available and represented an opportunity to increase the carrier's capacity.

The companies expect the transaction to close in the second quarter of 2005.

Earlier this month, Verizon Wireless signed a definitive agreement with NextWave Telecom to purchase spectrum for $3 billion. The deal covers the 10 and 20 MHz licenses in the 1.9 GHz range and will expand Verizon Wireless' coverage in 23 markets across the United States, including Boston, Denver, Detroit, Los Angeles, New York, Philadelphia and Washington, D.C. The deal also will give the carrier access to a new market in Tulsa, Okla.

The recently approved merger between Cingular Wireless and AT&T Wireless knocked Verizon Wireless out of the No. 1 U.S. wireless carrier spot in terms of subscribers. Verizon Wireless has been aggressively working to lure former AT&T Wireless customers to its network through a recently launched ad campaign, primarily focused in the Northeast, Southeast and Southwest. The ads are designed to question the combined entity's quality of service. Cingular has launched a campaign to counter Verizon Wireless' claims.

Cingular to Cut Work Force by 10 Percent

2004-11-23T14:09:00.000-08:00

11.23.2004, 02:09 PM
http://www.forbes.com/2004/11/23/1123autofacescan05.html

Cingular Wireless LLC will cut about 10 percent of its 68,000 jobs over the next 12 to 18 months as it combines operations with the recently acquired AT&T Wireless, the chief executive of the nation's largest cell phone company said Tuesday in an interview.

Many of the 7,000 or so job cuts will come from administrative ranks, while relatively few if any would come from customer service, CEO Stan Sigman told The Associated Press.

No cuts are expected until January to prevent disruptions during the key holiday-selling season. Company officials are still working on the exact numbers, and the cuts will be spread out over more than a year, he said.

"It's not going to be in the big groups of people. The big groups of people are in customer care," Sigman said. "This isn't about closing stores or distribution channels, nothing like that."

Sigman stressed that Cingular's goal would be to hire those employees back over time as the company expands its current subscriber base of 47.25 million.

"There will be people that will be affected by this, absolutely," Sigman said. "If you go to Redmond, Wash., where AT&T Wireless is based, there's anxiety there about how this is going to affect them and what is the impact on them. I've made a commitment that there will not be any forced layoffs until the first of the year."

Cingular, a joint venture of Atlanta-based BellSouth Corp. and San Antonio-based SBC Communications Inc., hopes to achieve billions of dollars in cost savings through the merger, which gave the company about 5 million more subscribers than former market leader Verizon Wireless.

After completing the $41 billion purchase of AT&T Wireless Services Inc. last month, Cingular asserted that no decisions about jobs cuts would be announced until the start of 2005.

But on Tuesday, asked if Cingular planned to cut more than 10 percent of its work force, Sigman said, "That's probably close."

The expected cuts are not related to the 10,000 or more positions which SBC recently disclosed plans to eliminate. Those cuts, about 6 percent of SBC's work force, are to be made by the end of 2005 through a combination of layoffs and attrition.

Some analysts have suggested that Verizon Wireless, which has 42.1 million customers, could eventually retake the No. 1 spot because it has been adding customers at a much faster rate than Cingular.

Also, since both Cingular Wireless and AT&T Wireless are already losing customers to rivals at a faster rate than Verizon, any service glitches during the integration of the two businesses could prove costly.

But Sigman, who at times pounded his fists on his chair to emphasize a point, asserted that the merger is running smoothly so far and that he is committed to holding the No. 1 spot.

"There are little minimal problems, a little system problem, a system in any market being down for a period of an hour or two, some training problems," he said. A smooth integration is "a passion that I have. It's also a hatred that I have that we're not already there. Everyday that we're not there, I hate it."

While the company is No. 1 in customers, Sigman said the company is still middle of the pack on other important measures like reputation.

"If Verizon overtakes our customer count in the next six to 12 months, then I've failed," he said. "I'm a very competitive person."

On other subjects, Sigman said Cingular is still assessing what its regulatory recovery fee will be on customers' bills in 2005.

Verizon Wireless and Sprint Corp. said last week they were lowering surcharges to defray costs for complying with a federal order to let customers keep the same cell phone numbers when switching to a different service provider. Both companies said the expense had declined since the rules took affect one year ago.

Cingular charges from 52 cents to $1.25 a month for regulatory recovery, while AT&T Wireless charges $1.75.

Asked about his future, Sigman, a 57-year-old Texas native, said he plans to stay on as CEO for some time. He's been in the industry for 40 years.

"I still have a fire in my belly. I'm not ready to retire," Sigman said.

Motorola launched 40-mile Point-to-Multipoint Canopy (900MHz)

2004-11-23T13:41:00.000-08:00

Motorola has launched an integrated version of its 900 MHz Canopy wireless broadband radio that features a fully integrated antenna that enables the radios to reach up to 40 miles in a point-to-multipoint, line-of-sight application and provide enhanced penetration for non line-of-sight applications.

Sprint, Verizon Outpace Cingular With $2 Billion Wireless Bet

2004-11-23T13:33:00.000-08:00

Nov. 23 (Bloomberg)
http://quote.bloomberg.com/apps/news?pid=10000103&sid=ao6eHGQMzKOc&refer=news_index

Usama Houlila pesters Sprint Corp. every week to begin its faster wireless-data service for the 1,000 attorneys of Chicago law firm McDermott, Will & Emery, where he is a technology manager.

Sprint, the third-largest U.S. mobile carrier, is winning a $1 billion bet that impatient customers such as Houlila will pay for speedier data service. So is Verizon Wireless, the No. 2 carrier. Together, they'll spend $2 billion by 2006 to build high- speed mobile networks for data, the fastest-growing part of the $100 billion U.S. cellular market.

``In every meeting, we bring it up,'' says Houlila, 36. McDermott's lawyers next year will be able to download 30-page files by laptops from outside the office in less than two minutes using Sprint's new technology -- 10 times faster than now.

Sprint and Verizon Wireless are now at least a year ahead of competitors -- including Cingular Wireless LLC, the largest carrier -- in developing so-called third generation or 3G mobile networks, says Mark Hesse-Withbroe, who helps choose $125 billion of investments at U.S. Bancorp Asset Management in Minneapolis.

``Having that head start will certainly give them a better opportunity to make these investments profitable,'' says Hesse- Withbroe, 34. U.S. Bancorp's holdings as of the end of September included 6.6 million shares of Verizon Communications Inc., parent of Bedminster, New Jersey-based Verizon Wireless, and 728,000 shares of Overland Park, Kansas-based Sprint.

Atlanta-based Cingular inherited a high-speed network in six markets from its Oct. 27 acquisition of AT&T Wireless Services Inc. Cingular will begin adding to those markets sometime next year, says spokesman Clay Owen.

Quick Internet Access

``We'll have that built out in a time that's competitive with the other major players in the U.S.,'' says Owen, declining to be more specific. Cingular hasn't said when it will complete the upgrade.

The 3G networks will help turn mobile phones and laptops equipped with wireless cards into devices with quick Internet access. Users will be able to transmit documents, music files, photos and video clips almost as quickly as they can now with cable modems and high-speed phone lines.

That will bring a 10-fold increase in the U.S. data market, to $32 billion by the end of 2008, according to the research company TeleCompetition Inc. of San Ramon, California. Meanwhile, with almost two-thirds of the U.S. population now using mobile phones, overall growth in wireless subscribers is slowing, according to the Cellular Telecommunications & Internet Association, a wireless trade group.

`Dwarfs' Voice Market

``The opportunity for non-voice services absolutely dwarfs the revenue opportunity that we've seen so far in the mobile voice market,'' says Albert Lin, a telecom analyst at American Technology Research in San Francisco. ``These new services are what's going to keep the revenue for these companies growing,'' says Lin, 37. He has a ``buy'' rating on Verizon Communications shares and doesn't own any.

``For the first time in almost a decade, we see a significant difference that will be material to the fortunes of the various carriers,'' says Lin.

The last comparable event was in 1996, Lin says, when Nextel Communications Inc. began selling its nationwide ``push-to-talk'' service, which enables callers to use the phone as a walkie- talkie. That has given Reston, Virginia-based Nextel average monthly customer revenue of $69, the highest in the industry.

Push-to-talk helped propel Nextel's shares to a fourfold gain in less than eight years, to $28.42 from $6.53 on Dec. 31, 1996. The Standard and Poor's 500 Telecommunication Services Index fell 5.9 percent over the same period.

Nextel, the fifth-largest carrier, has said it expects to have a next-generation network in place by early 2007.

Data Sales Soar

Executives of both Sprint and Verizon Wireless say they expect to complete their national 3G networks by early 2006.

At Verizon Wireless, mobile data sales will more than double to $1 billion this year from $400 million in 2003, says John Stratton, 43, chief marketing officer. The company hopes to triple the proportion of revenue from data by 2010, to 15 percent from 4.7 percent in this year's third quarter, says Chief Executive Dennis Strigl, 58.

The shares of the company's two owners have risen this year. Stock of New York-based Verizon Communications has soared 17 percent, to $40.99. Vodafone Group Plc of the U.K. has increased 4.3 percent to 144.50 pence in London.

`Awful Lot of Lifting'

At Sprint, wireless-data sales more than doubled to $255 million in the third quarter from a year earlier, accounting for 6.8 percent of total mobile-phone revenue. The company hasn't provided a full-year data forecast. The average amount that Sprint's customers spend on data each month could double by 2008 to $10, says President Len Lauer, 47.

Sprint stock has risen 17 percent, to $22.51 from $19.27 on April 23, when the company combined two separate classes of shares tracking its wireless and wire-line units.

Bellevue, Washington-based T-Mobile USA, the fourth-largest carrier, hasn't announced a timetable or said which technology it will use. The company has the largest wireless fidelity, or Wi- Fi, network in the U.S., says spokesman Bryan Zidar. Wi-Fi is an alternative to 3G technology. T-Mobile is owned by Bonn-based Deutsche Telekom AG, whose shares have risen 10 percent this year in Frankfurt to 16 euros.

Cingular will face challenges building a 3G network as it completes the $41 billion AT&T Wireless merger, says U.S. Bancorp's Hesse-Withbroe.

``It's not that Cingular can't get there,'' he says. ``That's just an awful lot of lifting.''

Shares Fall

That's one reason Hesse-Withbroe says he has been cautious about the shares of Cingular's parent companies, which have declined this year. SBC Communications Inc. shares have fallen 2.1 percent to $25.52 while BellSouth Corp. stock has dropped 3.3 percent to $27.36.

Cingular will be too busy completing its AT&T Wireless merger to build a national 3G network before 2007, says Philip Marshall, the director of wireless-technology research at the Yankee Group, a Boston-based research and consulting firm.

Demand for 3G services is growing because company information officers are no longer satisfied with the speed of today's mobile data, says Stratton, Verizon Wireless's marketing chief.

`Hunger for Wireless'

``You've got a lot of people out there who have now got a bit of hunger for wireless connectivity on a broadband basis but have been frustrated by the limited availability,'' says Stratton.

Verizon Wireless and Sprint have staked their fortunes on a 3G technology different from the one adopted by most carriers worldwide, including Cingular. It is known as Evolution Data Optimized, or EVDO. Their standard allows average data speeds as fast as 500 kilobits per second.

That compares with 384 kilobits for Cingular's Universal Mobile Telecommunications System, or UMTS, the 3G technology for roughly 70 percent of phones globally that now operate on the wireless standard known as Global System for Mobile Communications, or GSM.

To be sure, profits from big investments in 3G have so far been elusive. European phone companies including Vodafone, the world's biggest wireless operator, Deutsche Telekom and Milan- based Telecom Italia Mobile SpA, Italy's largest mobile phone company, raised debt and spent about $100 billion in 2000 on licenses for fast-data services.

Wi-Fi and WiMax

When the Internet bubble burst, the burden of debt forced companies to sell units and write off the cost of the licenses.

The European carriers are only now beginning to offer 3G services. Newbury, England-based Vodafone introduced its version on Nov. 10 in 12 European countries and Japan.

Asia is a different story. In the past 18 months, 8.5 million South Koreans have signed up for 3G services including video-news clips from carriers such as SK Telecom Co., the country's biggest mobile operator. It uses the same EVDO technology as Verizon Wireless and Sprint. High-speed services have also begun to take hold in Japan, which has 1 million users, according to a Nov. 16 report from Credit Suisse First Boston analysts.

Even if U.S. demand for 3G services continues to build, Sprint and Verizon Wireless run the risk that their new wireless networks will be eclipsed by other technologies. One contender is WiMax, which makes high-speed Internet access available as far as 30 miles from base stations. Another is Wi-Fi, a short-range version of WiMax that has proliferated at coffee shops, libraries and shopping malls where access is provided at an hourly rate or at no charge.

`Mass-Market Acceptance'

Sprint and Verizon Wireless have Wi-Fi services and say they are studying WiMax. Their investments in those technologies are dwarfed by their spending on 3G networks. If the other technologies win out, the two companies could be forced to write off millions of dollars in the 3G investments.

Verizon Wireless has signed up 75,000 customers for high- speed data in 16 cities and plans to make it available to almost two-thirds of the U.S. by the end of 2005.

Sprint will begin testing its network in two Midwest markets before the end of the year and plans to have service in most U.S. cities by the end of 2005, spokesman Scott Stoffel says.

Sprint and Verizon Wireless are initially aiming to win corporate customers, whose employees will use laptops with wireless cards to tap into corporate computers while traveling or working outside the office.

Use of mobile-phone handsets by consumers, professionals and companies will eventually account for 90 percent of 3G sales, says Lauer, Sprint's president. Basic monthly service fees per device will range from about $15 for consumers to $80 for corporate users, he says.

The upgrade to 3G will enable doctors to view X-rays on palm- size mobile screens and allow consumers to shoot and e-mail full- motion videos with their phones, says Lauer, citing two examples.

``You've got to get the mass-market acceptance along with the business acceptance for it to pay,'' says Lauer.

Last Updated: November 23, 2004 00:14 EST

Businesses rely most on carriers for wireless data

2004-11-19T11:48:00.000-08:00

By Mike Dano
Nov 19, 2004
http://www.rcrnews.com/news.cms?newsId=20513

A new study shows that businesses are most likely to look to wireless carriers-instead of device makers or computer suppliers-for their wireless data needs. Further, the business market represents a major opportunity for wireless, as enterprises have increased their spending on the technology by 36 percent.

The results, from NOP World Technology's Business Mobility Study, show large corporations are major buyers of wireless services and technology. The firm found 39 percent of respondents look to their wireless carriers to supply wireless data technology, while 14 percent look to computer suppliers and 13 percent look to mobile-phone manufacturers.

"When it comes to wireless data, businesses are thinking of their carriers such as Verizon Wireless and others as their primary vendor because reliability and coverage is so critical," said Richard March, the research firm's senior vice president. "However, other players such as handset manufacturers and computer makers may grow in influence as more productivity and industry-specific applications are developed for wireless."

In other findings, the study shows Motorola Inc. is the most preferred brand for mobile phones with 20 percent of respondents picking the company. Nokia Corp. came in second at 12 percent, and BlackBerry maker Research In Motion Ltd. scored 11 percent.

"BlackBerry is an acknowledged contender both in data solutions and voice solutions," March said. "The question is whether brands such as Motorola that are strong in the voice portion of the market can challenge traditional data powerhouses such as Dell and vice versa."

The firm also found more than 70 percent of businesses use mobile phones, and more than one-third of large companies use smart phones. Further, two-thirds of respondents said they would like to have a consistent operating system across all their wireless data devices.

Optimism Pervades At 3G World Congress

2004-11-16T16:51:00.000-08:00

By Brad Smith
November 16, 2004
http://www.wirelessweek.com/index.asp?layout=print_page&doc_id=136872

Hong Kong -- Although 3G technologies may not have spread as quickly as the industry expected, keynote speakers at the opening of the 3G World Congress were optimistic about the rollout of the networks this year and in the future.

One of the keynoters, Siemens Communications President Lothar Pauly, said 3G is spreading more quickly than GSM had done in the 1990s. There will be about 15 million W-CDMA subscribers by the end of 2004 and that will reach 150 million in 2007. About 50 networks will have launched by the end of the year.

The first day also featured keynote addresses from two carriers with 3G services -- T-Mobile International and 3 Hong Kong -- plus two Chinese carriers planning their own launches. The Chinese carriers are Hong Kong's SmarTone, which expects to launch its W-CDMA network in December, and China Unicom, which may get a 3G license next year for Mainland China.

Very little was said by the carriers about what types of 3G content will be compelling to subscribers, except that 3G offers faster connections. Specifics were left to Lucy Hood, a senior vice president for News Corp. "The killer application for a movie studio is running a movie trailer on a cell phone," Hood said.

She showed a number of demonstrations to illustrate that the media giant plans on using 3G to show movie trailers, send news and sports updates, treat subscribers to animated cartoons, send a video "kiss" from Marilyn Monroe, walk Paris Hilton across handset screens, and even develop a mobile-only movie series based on the Fox Network's TV series "24."

Fox will launch a new film channel developed for mobile phones next year that will offer trailers and clips from more than two dozen motion pictures, Hood said. For Valentine's Day, the company will offer Marilyn Monroe screen savers that include the late actress's iconic lipstick traces.

Perhaps the most intriguing 3G application she talked about is a TV series for mobile phones called "Mobisodes," which will only be offered over Vodafone's new 3G networks. Hood said Fox developed an original video series based on "24" that will offer specially designed mobile "conspiracy" episodes, each leading to the next one.

Vodafone last week announced the launch of 3G services in Britain and seven other countries. The carrier said it expects to have 10 million 3G subscribers in about 18 months.

Douglas Li, CEO of SmarTone, said the challenge for 3G operators will be to develop content and services that take advantage of mobility and is not just taken from another medium. He said carriers have to keep in mind that mobile phone users are active, not passive users, and also seek out content that stirs their emotions.

Zhang Fan, chief technology officer of China Unicom, said the carrier's experience with cdma2000 1X shows that subscribers will pay for enhanced content. China Unicom operates both GSM and CDMA networks and Zhang said the carrier's CDMA subscribers use value-added content more than GSM subscribers.

Lutz Schade, executive vice president of T-Mobile International, said the carrier has seen an encouraging trend with its W-CDMA networks. Subscribers have started using the 3G networks heavily, he said. T-Mobile has 3G licenses in eight countries and most have either launched service or are preparing to do so.

Schade said 3G services still don't always meet customer expectations, but he said network upgrades to high speed downlink packet access (HSDPA) will improve performance. T-Mobile plans to launch video services in 2005.

Much of the talk in the hallways at the convention center was about the prospect for 3G licenses in Mainland China. The Chinese government recently completed tests of various technologies and most analysts believe it will award 3G licenses in mid- to late 2005. The main questions are about not only how many licenses will be granted, but what technologies will be used. The tests, which were all officially successful, involved W-CDMA, cdma2000 and the Chinese-developed TD-SCDMA.

T-Mobile USA Boosts Subscriber Base - added WiFi Roaming Agreements

2004-11-11T11:08:00.000-08:00

T-Mobile USA Boosts Subscriber Base
http://www.wirelessweek.com/index.asp?layout=print_page&doc_id=136795
By Susan Rush
November 11, 2004

T-Mobile USA has increased its customer base 24 percent since the onset of 2004, most recently adding 901,000 new subscribers in the just-ended third quarter. Separately, the carrier boosted its Wi-Fi hot spot access through six new roaming agreements.

For the third quarter, service revenue, which includes postpay, prepaid and roaming and other service revenue, came in at $2.61 billion, up from $2.46 billion in the previous quarter and $1.90 billion in the third quarter of 2003. Average revenue per user was $55, up from $54 in the third quarter of 2003.

During the quarter, the carrier added 901,000 new subscribers. For the first three quarters of 2004, net new customers totaled 3.2 million, up from 2.2 million for the first three quarters of 2003. Postpay churn averaged 2.6 percent per month in the third quarter of 2004, up from 2.4 percent in the second quarter of 2004, but down from 2.7 percent in the third quarter of 2003.

Separately, T-Mobile USA said it forged deals to increase its T-Mobile HotSpot network to include 11,500 access points worldwide. The agreements were sealed with BT Group, Telecom Italia Mobile, NTT DoCoMo, StarHub, Telstra and T-Mobile's parent Deutsche Telekom.

T-Mobile now has roaming agreements in place to offer Wi-Fi Internet access in the United Kingdom, Germany, Austria, the Netherlands, Italy, Czech Republic, Japan, Malaysia, Singapore, Australia and the United States.

FCC Gives Internet Calls Half A Push - Vonage VOIP

2004-11-10T04:40:00.000-08:00

David M. Ewalt, 11.10.04, 7:40 AM ET

NEW YORK - You could almost hear the sighs of relief when the U.S. Federal Communications Commission ruled on Tuesday that Internet-based phone services should be regulated by the federal government, not by the states. But investors and entrepreneurs in the Voice-over-Internet Protocol business still have some big questions hanging over their heads, and the future of Internet telephony isn't yet secure.

In the ruling, the FCC said that DigitalVoice, a VoIP service offered by Vonage Holdings, is not subject to traditional state public-utility regulation. Officials in Minnesota had been trying to classify the product as a telecommunications service, which would have made it subject to certain rate regulations and fees, and would have required the company to provide emergency 911 service.

But the commission said that since DigitalVoice customers can use their phones from an Internet connection anywhere in the world, the service can't be tied to any one state, and should be considered an interstate communication, subject to federal jurisdiction. The FCC extended the decision beyond Vonage, saying that similar types of VoIP services--such as those offered by cable companies including Time Warner (nyse: TWX - news - people ), Cablevision Systems (nyse: CVC - news - people ) and Charter Communications (nasdaq: CHTR - news - people )--also would not be subject to traditional state rules.

"It's not really surprising, but it is sort of the beginning," says Burton Group analyst David Passmore. "The FCC's been very vocal that they believe that VoIP is off-limits to the state regulators, but this is the first time that they've really acted on it."

The decision was warmly received by the VoIP industry, where growth has been haunted by the specter of regulation, which threatened to raise the price of calls and reduce the profitability of service providers. In a statement, Vonage Chief Executive Jeffrey Citron said the decision assures that VoIP services will continue to compete in the marketplace, and will allow more people to enjoy the benefits of Internet phone service.

"This is a great start," says Jeffrey Pulver, co-founder of Vonage and current CEO of VoIP rival Free World Dialup. In February, the FCC said that Free World Dialup should be considered an "unregulated information service" under FCC jurisdiction, rather than a telecom service, which would be governed by numerous state and federal regulations. But the commission didn't extend the ruling to encompass other services or vendors. "This could have been just as narrow" says Pulver of Tuesday's ruling, "but the commission came forward and carved out these types of services in a broad fashion. It provides a level of certainty for investors."

Yet the FCC's Vonage decision might be more notable for what it didn't say than for what it did. The commission declined to express an opinion about whether Vonage should pay general state taxes and fees, or if it's subject to state laws governing fraud, commercial dealings, marketing, advertising and other business practices. The ruling dodged the question of whether VoIP services have to pay access charges to traditional phone vendors when they complete calls on their networks, or if they have to contribute to universal service funds that bring phone service to rural areas.

Vonage had also asked the FCC to rule on whether DigitalVoice should be classified as an "information service," like Free World Dialup, which would free it entirely from telecommunications industry regulations and fees. The commission is still considering that request and will address the issue in a future ruling.

"The commission [yesterday] showed a few more pieces of the puzzle, but they haven't showed all the puzzle," says Legg Mason telecommunications analyst Blair Levin, who formerly served as chief of staff for Reed Hundt, chairman of the FCC from 1993 to 1997. "There are some very big questions remaining that will either have to be answered by the FCC or by the Congress."

"It's still sort of a Band-Aid, stopgap measure, to keep state regulators at bay until they can come up with a new framework," agrees Passmore. FCC commissioners may also be waiting for Congress to take the lead on questions like universal service, he says.

Meanwhile, the remaining questions will continue to bear heavily on the futures of VoIP vendors like Vonage and 8x8 (nasdaq: EGHT - news - people ), which offers a service called Packet8. "From an investor perspective, you now know slightly more than what you did [before the ruling]," says Levin. "But in terms of the viability of their business plans, there are still so many uncertainties."

Verizon to Buy All of NextWave's Spectrum

2004-11-08T12:00:00.000-08:00

Nov 8, 2004
http://www.americasnetwork.com/americasnetwork/article/articleDetail.jsp?id=132629

Verizon Wireless agreed to buy all of NextWave's PCS licenses for $3 billion, the companies said. A federal Bankruptcy Court will be asked to rule on the request at a Nov. 30 hearing in White Plains, N.Y., since the sale represents NextWave's new reorganization plan. Meanwhile, a top FCC official said the deal likely won't set off regulatory red flags. If completed, the sale will essentially end the multiyear NextWave saga, one of the telecom industry's most dramatic ongoing stories. Verizon Wireless previously emerged as the likely buyer because of the deep pockets of its parents, Verizon and Vodafone (CD Oct 15 p1). Nextel, like other carriers, "desperately" wanted the spectrum but couldn't pay the price, especially as it puts together financing for its purchase of a nationwide 10 MHz license at 1.9 GHz through the 800 MHz rebanding, sources said.

Under the agreement, Verizon gets 10- and 20-MHz licenses in 23 markets across the U.S., including 20 MHz in N.Y., D.C., Boston and Baltimore and 10 MHz licenses in L.A. and Philadelphia. All the licenses are in the 1.9 GHz band. The deal prices the spectrum at $2.85 per MHz POP, compared to the $4.63 the company paid for its other purchase of N.Y. spectrum. Legg Mason calculated that if the N.Y. spectrum was similarly valued this time, the rest of the spectrum purchased would be valued at $1.90-$1.95 - - marginally more than the $1.50-$1.70 in comparable deals. The purchase comes a week after Verizon was overtaken by Cingular as the largest U.S. wireless carrier with the AT&T Wireless acquisition and adds to the company's already formidable spectrum holdings.

Precursor analyst Rudy Baca said he expected Verizon to sell off its 900 MHz cellular licenses and consolidate its holdings at 1.9 GHz, which will accelerate deployment of Verizon's EvDO network. Baca doesn't expect Verizon to have to sell off any of the spectrum, provided it doesn't exceed 80 MHz in any market.

Legg Mason said it expects the bankruptcy court and shareholders to approve the deal in early 2005. "We are not aware of any potential deal breakers, though the spectrum acquisition by Verizon Wireless will presumably receive careful government scrutiny, particularly the additional 20 MHz in N.Y.," the firm said. "We understand that the additional spectrum in N.Y. City would raise Verizon Wireless's spectrum holding there to 65 MHz, below a 'cap' applied by regulators in some markets in evaluating the Cingular merger with AT&T Wireless."

Cell Phone Competition Is Heating Up in Rural America

2004-11-08T09:47:00.000-08:00

New York Times (print and online editions)
By: Matt Richtel
11-6-04

The big cell phone companies dominate the nation's major markets, and the medium-size ones too. But many of the nooks and crannies -- the exurbs and rural markets -- belong to smaller second-tier companies run by plucky entrepreneurs who took the lead in building cell towers in lonelier places.

Regional providers in places like Waco, Tex.; Waukesha, Wis.; and the Antelope Valley in Nevada have had a good business serving small communities with little competition while collecting fees from the major carriers when their customers roam to rural areas.

But these companies, long under the radar for most investors and consumers, are feeling intense pressures these days from national carriers entering rural territories looking for subscribers now that urban markets are saturated.

"To be very honest, there's no place to hide anymore," said Jack Rooney, the chief executive of United States Cellular, one of the three mobile providers serving this town about two hours north of San Francisco. "I can't think of one market that doesn't have three or four competitors."

As the national carriers build out their networks, they have less need to pay rural providers for roaming privileges. And incursions by the big providers force the smaller players to spend millions to upgrade their networks.

U.S. Cellular, based in Chicago, is the second-largest regional provider, with 4.8 million subscribers in 26 states. The largest, Alltel, based in Little Rock, Ark., serves eight million subscribers, some in major markets like Tampa, Fla., and Phoenix. But most are far smaller, like Dobson Communications, with 1.6 million subscribers; Leap Wireless International, with 1.5 million, and Western Wireless, with 1.3 million.

Mr. Rooney and executives of smaller companies say they still have an advantage because they can provide good personal service. Indeed, in many areas they are better known than the major providers -- Verizon Wireless, Cingular-AT&T Wireless, T-Mobile, Sprint and Nextel.

Perhaps more important, cell phone service is still largely a local business, which allows the smaller companies to compete even in some major markets by selling lower-cost plans to people who make mostly local calls.

Nationwide, some 168 million people own cell phones, but only about 5 percent of the minutes they use are for calls outside their local coverage area, said Tom Seitz, a telecommunications industry analyst with Lehman Brothers.

''For all the hoopla, the wireless business is a local business,'' Mr. Seitz said.

Still, competition is bound to intensify, said Kevin M. Roe, an industry analyst with Roe Equity Research. In the next three to five years the big players will ''turn their attention to the more rural areas,'' he said. ''And the landscape is going to turn against the rural operators.''

But until then, he said, the little guys ''have a good business.'' In fact, according to a study published in September by UBS, the investment firm, subscriber growth rates for the last year have been slightly higher for regional companies than for the national carriers.

Ukiah offers a good example of the competitive landscape. U.S. Cellular has served this town of about 15,000 residents since 1992. For many of Ukiah's residents, U.S. Cellular has been synonymous with cellular service, though GTE, which merged with Bell Atlantic to form Verizon in 2000, has offered service in Ukiah for more than a decade. Three years ago, Edge Wireless, a company based in Bend, Ore., also came to town.

Despite the additional choices, Barbara Taylor, 53, a Ukiah resident who works in a nearby Indian casino, said she had been with U.S. Cellular for six years. She and her husband pay $63 a month for two phones and 500 shared minutes. She does not pay for a service plan that would let her roam nationally, but she said the phone worked just for the areas she liked to travel to, including her occasional gambling trips to Nevada.

''I can go clear to Reno and get reception,'' she said.

Ms. Taylor is not paying the lowest price per minute in town. If she switched to Verizon Wireless, which is sold out of the Radio Shack store, she could get a better deal, with 1,200 nationwide minutes, for $79.99. But she said her friends who had tried Verizon had not found the service as reliable as that of U.S. Cellular.

Bobbie Rivas, 55, recently moved to Ukiah from Los Angeles. For years, she had been a happy customer of Verizon Wireless. But because Verizon's reception is patchy here, she recently switched to U.S. Cellular.

Verizon Wireless, though it has 30 million customers nationwide, is fighting for market share here. Richard Hardigree, the manager of Radio Shack, said that he went to every carnival and fair in the area in the last two years to promote Verizon's cell phone service.

He said sales had been steadily growing, testing one of U.S. Cellular's strengths, customer retention.

Industry analysts said U.S. Cellular's monthly churn rate -- a measure of how many subscribers it loses -- is, at around 1.6 percent, among the lowest, if not the lowest, in the mobile phone industry.

Mr. Rooney said the company planned to fill in some gaps in coverage next year, like adding service in St. Louis. But he insists that U.S. Cellular does not intend to become a national carrier.

Competing head to head with the big five carriers is not a long-term strategy for success, argued John Stanton, the chief executive of Western Wireless, based in Bellevue, Wash.

Mr. Stanton, who founded VoiceStream, a wireless company that was acquired by Deutsche Telekom in 2001 and absorbed into T-Mobile, said the huge marketing efforts of national carriers will cause consumers to buy national plans even if they do not need the broad coverage.

''It's very difficult to compete in the urban markets against the national providers,'' he said. Western Wireless, operating west of the Mississippi in 19 states, serves markets where there are fewer than 11 people per square mile.

''We try to find opportunities where the competition, especially from wireless providers, is low,'' said Mark Rubin, director of federal government affairs for Western Wireless.

For instance, in McCamey, Tex., a town with around 800 households, Western Wireless offers local service costing about $30 a month, excluding features like voice mail. It charges roughly the same fee for service to the 20,000 residents of the Pine Ridge Indian Reservation in South Dakota.

Like rural phone companies, rural wireless carriers can receive federal subsidies to serve residents in out-of-the-way and poor markets. Western Wireless receives about $50 million a year in subsidies from the Universal Service Fund, as the federal program is known, Mr. Rubin said.

Another significant part of Western Wireless's business is leasing network space to national carriers when their customers roam into the rural areas. Of Western's $1.5 billion in revenue last year, $200 million was from roaming fees.

But that source of revenue has been declining across the industry. As cell calls become cheaper, the per-minute roaming charge that national carriers pay to regional companies has dropped to 16 cents a minute, on average, from as high as $1 in the 1990's, Mr. Stanton said.

The rural carriers may not be able to rely on roaming fee revenue for long. Some have started to wean themselves from those fees and have sought out new sources of revenue.

But for all the pressures they are under, Mr. Seitz of Lehman Brothers said, small carriers operating in less-populated areas still have a good hold on their customers. ''By and large, the more rural you are,'' he said, ''the longer your competitive position is sustained.''

Earnings Roundup: Nextel Partners, Lightbridge, Gemplus

2004-10-28T22:56:00.000-07:00

By Susan Rush
October 27, 2004
news@2 direct
http://www.wirelessweek.com/index.asp?layout=documentPrint&doc_id=136471

The quarterly earnings parade continues, as Nextel Partners, Lightbridge and Gemplus are among the latest companies to report in the wireless sector.

Nextel Partners turned a year-ago loss of $22 million into net income of $35.5 million, or 12 cents a share, which beat analysts' on average estimates of 11 cents a share. The company, which sells Nextel Communications' wireless services, posted revenue of $357.5 million, up from $280.9 million. ARPU came in at roughly $68 for the quarter, and when roaming revenue is included, ARPU increased to $77 for the period. Average monthly churn held steady at 1.4 percent. Looking ahead, the company upped its full-year service revenue projections from $1.25 billion to $1.28 billion.

Lightbridge posted third-quarter revenue of $34.3 million, up 16 percent from the $29.6 million posted in the year-ago quarter. Revenue totals include Authorize.Net revenue, which increased 26 percent to $8.8 million. In September, Lightbridge announced a restructuring effort designed to better position itself to increase shareholder value, which included handing out pink slips to roughly 12 percent of its workforce. Including restructuring costs, the company reported a net loss of $4.3 million, or 16 cents per diluted share, up from a net loss of $1.9 million, or 7 cents per diluted share a year earlier.

Gemplus reported group revenue increased 13 percent year-on-year in the third quarter, which by region translates to a 44.3 percent increase in revenue in the Americas and a 15.7 percent increase in EMEA. Revenue from the Asia region, however, dipped 8.2 percent. Wireless revenue was up 19.9 percent year-on-year, with wireless shipments increasing 28.7 percent 61.2 million units. Looking ahead, Gemplus expects full-year 2004 operating income to be between $38 million and $44 million.

M&A: Wireless Companies Forge Acquisition Pacts

2004-10-28T22:55:00.000-07:00

By Susan Rush
October 28, 2004
news@2 direct
http://www.wirelessweek.com/index.asp?layout=documentPrint&doc_id=136489

Mergers and acquisitions: Triton PCS deals for spectrum; U.S. Wireless snaps up Ohio entities; and PCTEL buys certain Andrew assets.

Triton PCS is snapping up Urban Comm-North Carolina's outstanding stock for $113 million in cash to get its hands on 20 licenses needed to shore up its spectrum position in the Southeast. The 20 licenses cover a population of roughly 7.4 million people, with eight of the licenses covering North Carolina, five covering South Carolina and seven covering Virginia. The license assets reside in the C and F broadband PCS spectrum blocks. Separately, Triton PCS reported third-quarter adjusted EBITDA of $64.5 million and net cash provided by operating activities of $58.7 million. The company ended the quarter with 899,862 subscribers.
U.S. Wireless Online has forged a deal to acquire MJS Holdings and its subsidiaries Bluemile Wireless and Instant Workplace. Bluemile Wireless operates wireless broadband networks in Cincinnati, Columbus, Dayton, Cleveland and surrounding areas in Ohio. Instant Workplace is an Application Service Provider (ASP) with offices in Cleveland and Columbus, Ohio. The deal is expected to close Nov. 20.
PCTEL will plunk down $10 million in cash for select antenna assets from Andrew. Specifically, the deal covers Andrew's GPS, On-Glass and Antenna Specialists brands of products. As a result of the acquisition, PCTEL plans to move out of its Hanover Park, Ill., headquarters and into a much larger facility in Bloomingdale. The company is targeting $40 million in revenue related to its antenna business in 2005.

FCC Gives Mega Merger Approval - Cingular/AT&T Wireless

2004-10-28T22:52:00.000-07:00

By Mark Rockwell
October 26, 2004
news@2 direct
http://www.wirelessweek.com/index.asp?layout=documentPrint&doc_id=136458

WASHINGTON--A somewhat divided FCC told Cingular Wireless and AT&T Wireless this morning they could proceed with their $41 billion merger, providing they divest some local wireless markets.

The companies will have to divest spectrum or operating units in 22 local markets before they can proceed. The FCC's requirements bumped up yesterday's recommendation by the Department of Justice (DOJ) that the companies should divest holdings in 13 local markets.

In 16 rural markets primarily in the Midwest and central southern United States, the commission said the merger would result in 'high market share for the merged entity and fewer competing carriers' and said AT&T Wireless' units operating in those areas should be divested along with their spectrum.

In two larger markets, Detroit and Dallas, the commission said the companies would have to divest 10 MHz of spectrum throughout those markets to allow competitors 'sufficient spectrum' to compete. In Detroit, the merged company can hold a maximum of 65 MHz and 70 MHz in Dallas.

The FCC said a 'management trustee' should be appointed by the two companies to manage the assets destined for divestiture day to day, but allowed the companies to retain legal control of the assets. That means the companies can oversee the marketing and selling of the assets to third-party buyers, while the management trustee is in day-to-day control of the assets, according to the FCC.

Analysts said the FCC's conditions and the conditions set by DOJ yesterday on the deal weren't stringent and give the wireless industry some needed guidelines for future mergers. 'The conditions imposed by the government were light. The DOJ required some kind of divestiture in a total of 13 local markets. The FCC required divestitures or ownership changes in a total of 22 local markets, some of them overlapping with DOJ's list. In addition, Cingular must divest 10 MHz of spectrum in Detroit, Dallas and Knoxville, Tenn., and may not participate in the planned January 2005 auction of the leftover NextWave spectrum in markets where Cingular would have in excess of 70 MHz of spectrum,' said a report this morning from Legg Mason Wood Walker.

'This set of decisions from DOJ and the FCC will provide clarity of what to expect from government in wireless mergers,' said Phil Verveer, partner at Wilkie, Farr & Gallagher. Verveer worked as a trial lawyer in the DOJ's antitrust division in the 1970s and helped break up the Bell system. 'A lot of businesses are waiting' on those guidelines to go ahead with other mergers and competitive plans, he said. The approval and requirements will shape how those plans are implemented.

There are stirrings already. Some rural wireless carriers have indicated interest in some of the spectrum and licenses that have to be spun off by the company, but officials at the companies said they haven't completely evaluated the possibilities yet and don't have immediate plans to buy anything.

The FCC also said Cingular would have to 'unwind' its joint venture with T-Mobile, with the transfer of 10 MHz of PCS spectrum in San Francisco, Sacramento and Las Vegas from Cingular's PacTel subsidiary to T-Mobile. The commission also said Cingular would offer long-term leases to T-Mobile in San Francisco, Los Angeles and New York to transition Cingular/T-Mobile joint venture customers off the service.

Although all five commissioners voted to approve the deal, it came with a studied dissent from the agency's Democratic commissioners. They criticized the decision for not weighing the deal's possible effects on overall telecommunications competition. A lengthy statement from commissioner Michael Copps said the deal could concentrate too much power in the hands of Cingular's wireline Bell company owners, BellSouth and SBC. Commissioner Jonathan Adelstein, although pleased by the merged companies' potential for wireless competition, also had concerns about concentrating power with Cingular owners BellSouth and SBC. In areas where BellSouth and SBC are the wireline providers and Cingular would become the primary wireless provider, BellSouth and SBC's dominance of telecom markets, both wireline and wireless, could be stifling, according to Copps.

However, in a statement accompanying the order, Copps said his dissent wasn't aimed at wireless competition, which the commissioner says will benefit from the deal. Copps said his objection was over 13 paragraphs in a 100-page order -- but, he says, those 13 paragraphs are at the 'the center of so much of this commission's competition philosophy.' Copps' office is sensitive to the perception that the commissioner is against the merger and had worked to minimize reports prior to the approval's release that Copps was trying to block it.

In a statement accompanying the approval, FCC Chairman Michael Powell said the commission has addressed Copps' and Adelstein's concerns. 'In their partial dissent, my colleagues incorrectly assert that we confined our merger evaluation to wireless intermodal issues. To the contrary, I took very seriously the complex issues that arise from the combination of wireline and wireless companies. This was and will remain a matter of focus and concern. However, at the end of the day, we did not believe that the evidence in the record was sufficient to justify... additional conditions.'

For Cingular, Now Comes the Hard Part

2004-10-28T22:47:00.000-07:00

10/1/2004
http://www.businessweek.com/technology/content/oct2004/tc20040101_2244_tc024.htm

With approval for the AT&T Wireless merger imminent, the key issues are integration, debt, and price-cutting rivals

The wireless industry's biggest deal in years is nearing completion. Service providers Cingular and AT&T Wireless (AWE ) are expecting to receive Justice Dept. approval -- with some conditions possible -- of their megamerger early in the week of Oct. 4, BusinessWeek Online has learned. A later approval from the Federal Communications Commission (FCC), expected within weeks, will crown the combined company as the No. 1 U.S. wireless-service provider, pushing current king Verizon Wireless down a notch.

Both outfits have been laboring mightily over the past month to get regulatory approval. In September, Cingular sold its messaging unit and swapped some wireless operations with service provider Triton PCS (TPC ). AT&T Wireless sold its stakes in service providers Eurotel Bratislava and Rogers Wireless (RCN ).

All of these moves should clear the path to approval, says Richard Nespola, CEO of telecom consultancy Management Network Group in Overland Park, Kan. Additional divestitures of wireless spectrum and, possibly, pieces of AT&T Wireless's network might be required, but analysts believe they would likely be relatively minor.

SUBSCRIBER DRAIN. Even with trustbusters' approval, this merger -- the resulting company will be called Cingular -- won't be easy. Many analysts predict that 6% to 10% of the combined entity's 46.7 million subscribers will jump the boat in the next 12 months. That leaves an opening for Verizon Wireless, which boasted 40.4 million subscribers by the end of this year's second quarter and is growing much faster, to take back the top spot.

The Cingular-AT&T Wireless subscriber drain started earlier this year, as customers grumbled about AT&T Wireless' service quality and worried about the merger's aftershocks. AT&T Wireless' monthly churn has grown from 2.6% at the end of 2003 to a recent 3.4%. And both Cingular and AT&T Wireless were the only Top Six U.S. wireless-service providers to lose market share in the second quarter, according to market consultant Gartner. Big gainers included Verizon Wireless, Sprint PCS (PCS ), Nextel (NXTL ), and T-Mobile.

Subscriber losses could accelerate further, kicking off another pricing war, and leading to more consolidation in the wireless industry, says Nespola. To keep customers, Cingular might have to keep cutting rates that are already dropping by about 10% a year. Rivals would have to follow suit -- and feel the resulting bite on their earnings. That could force smaller wireless players to consolidate around current No. 7 wireless service provider Alltel (AT ). Or perhaps a cable company could purchase one of the major wireless players, says Jeff Kagan, an independent telecom analyst in Marietta, Ga.

EASTERN POWERHOUSE. Worse yet, Cingular, a joint venture between telcos SBC (SBC ) and BellSouth (BLS ), is lesser known on the East Coast, where its parent companies don't operate, says Todd Rosenbluth, an analyst with rating service Standard & Poor's in New York.

Even with heavy marketing, it will always be at a disadvantage in those markets, vs. Verizon Wireless, Rosenbluth figures. One of Verizon Wireless's parents, telco Verizon (VZ ), is a powerhouse in the East. And its relationship with Verizon Wireless allows the latter to offer bundles of discounted services in that region, such as wireline and wireless calling, that Cingular likely won't be able to match.

The new Cingular also might have trouble keeping up with Verizon Wireless' pace of innovation, says Rosenbluth. Cingular and AT&T Wireless have different billing and back-office systems. Until these are integrated and streamlined, the new company will have much higher costs when introducing new services.

HELP FROM JAPAN. Here's why: Assume the new Cingular offers its customers an ability to look up wireless numbers in a directory. To make such a service work, the system would need to dip into both AT&T Wireless' and Cingular's directories. The new Cingular's rivals will only need to check a single directory.

Such integration issues might be especially harmful, considering that both Cingular and AT&T Wireless are already lagging their peers in data services. Among the Big Six providers, each has rated last in data-services revenue growth, says Rosenbluth. That's troubling, since this is the fastest-growing wireless market.

Not all is bleak, of course. After their systems and staffs are integrated, the new Cingular could enjoy annual cost savings in the billions of dollars. And AT&T Wireless' minor investor and long-time partner, Japan's NTT DoCoMo (DCM ), seems willing to work with Cingular on enhancing its data services. AT&T Wireless' m-mode data-services offering is certainly better than Cingular's, says telecommunications analyst Derek Kerton of Kerton Group in San Jose, Calif.

MOUNTAIN OF DEBT . Still, improving data services will take money -- which the new Cingular and its parents might not have. They will be deep in debt once the $41 billion merger with AT&T wireless goes through.

For instance, SBC, which already carries $15.1 billion of long-term debt on its books, will likely have to assume $10 billion more to make the purchase, estimates Jim Veneau, senior analyst with rating service Moody's in New York. As a result, on Sept. 28, S&P downgraded $86 billion worth of BellSouth, SBC, and Cingular long-term debt. The downgrade and the high debt levels could make sparing funds for enhancing Cingular's networks and services harder.

The two companies' operating results will also only get shakier -- at least in the short term -- after the merger. S&P expects SBC's margins before charges like depreciation and taxes to fall from 32.6% this year to 30% in 2005, partly because of the merger's high costs, and partly because the company's wireline business is facing more competition.

PRICE WAR AHEAD? If unable to match Verizon Wireless in services, the new Cingular might resort to competing more on price. Already, Cingular offers roll-over minutes and some of the lowest-cost plans in the industry. Its operating income had dropped from $829 million in the first half of 2003 to $578 million in the first half of this year. Further price cuts and higher costs could further hurt its performance.

The bottom line: Yes, in a few weeks Cingular might grab the No. 1 spot in wireless. But it's not standing on even ground. "They can't take their eye off the ball," says Kagan. "If they do, Verizon Wireless may pass them."

Verizon Wireless and T-Mobile in Dead Heat for Top Customer Satisfaction

2004-10-28T08:08:00.000-07:00

A recent Consumer Mobility Study (CMS) by In-Stat/MDR (http://www.instat.com) has revealed that Verizon Wireless and T-Mobile USA are virtually tied for the top spot in Customer Satisfaction.

The high-tech market research finds that, although the US wireless industry's overall Customer Satisfaction ratings remained steady during the first half of 2004, some carriers' relative positions shifted significantly. Notably, T-Mobile posted a solid improvement, and Nextel slipped from the top spot into the second tier of providers, in terms of Customer Satisfaction.

In a time of intense competition and industry consolidation, consumers' perceptions of their wireless carriers are critical factors in the battle for market share. While the industry's service levels remain strong in several key areas, there are a number of opportunities for improvement in Quality of Service and Customer Service, as subscribers grow increasingly willing to switch carriers in the pursuit of better service.

In-Stat/MDR has also found that:
Consumers' willingness to switch providers has increased dramatically in the past year, with 19.8% of survey respondents stating that they "definitely will" or "probably will" switch in the next 12 months, versus only 14.5% in July 2003.

Sprint subscribers have the longest average tenure and T-Mobile subscribers have the shortest.

Verizon Wireless subscribers were the most impressed with their provider's Quality of Service.

In terms of Quality of Service, the most frequently cited carrier strength was good coverage around town. For carriers as a whole, the most frequently mentioned weaknesses were poor in-home coverage and too many dropped calls.

Verizon Wireless and T-Mobile received the highest marks from their subscribers in Customer Service.

The most frequently mentioned strengths for Customer Service were bills that are easy to read and understand, as well as courteous and helpful customer service representatives. Many CMS respondents were not able to name specific weaknesses in this area, or stated that their carrier does not have specific Customer Service weaknesses. Among the specific attributes mentioned, however, the greatest perceived weakness was low-quality support at retail stores.

Comcast Gets More Bullish On VoIP

2004-10-27T15:16:00.000-07:00

10.27.04, 3:16 PM ET
http://www.forbes.com/2004/10/27/1027automarketscan12_print.html

Prudential Equity Group said it has "gained renewed confidence" in voice over Internet protocol (VoIP) being a new incremental growth driver for Comcast (nasdaq: CMCSA - news - people ) and sees marketing as a better way to stimulate growth than price cuts. The firm said Comcast is more bullish on VoIP, citing comments from the company and potential backhaul deals with Sprint (nyse: FON - news - people ) and/or Level 3 Communications (nasdaq: LVLT - news - people ). Prudential said Comcast missed the research firm's estimate for operating income before depreciation and amortization by about 3% in the third quarter, but the miss was narrower excluding one-time events such as hurricanes. The firm said Comcast's data and digital subscriber additions in the quarter were "well ahead of expectations" while basic subscriber additions were in line. Prudential noted that advanced video products were taking hold, with Comcast adding about 10,000 new digital video recorder (DVR) customers and 15,000 high-definition customers per week; the company began offering DVR service to Motorola (nyse: MOT - news - people ) markets this month, bringing DVR service to 100% of the footprint. Prudential rates Comcast at "overweight" with a $39 target price.