EK Telecom Analysis Newsletter

Sprint Nextel Watch: Hesse, showing leadership

Related Links: 

Sprint's Wake-up Call

Summary

Hesse deserves an 'A' for going public to shake up and embarrass entrenched management and the legacy mindset with details of customer care problems.

Analysis

I've tried come up with ideas for analysis so that I can wean myself from being a one-note analyst, since so much of my ongoing analysis is Sprint Nextel centric.  However, there just seems to be so much new news every week that it's difficult to pull away to focus on other issues in the wireless industry.  The latest revelation is this BusinessWeek article on Sprint's sad state of customer service.  That Sprint has bad customer service itself is not a revelation.  Indeed, the details are astounding.  I believe what is more telling though is what the story tells us about the new leadership of Dan Hesse.

There has been a lot of excellent analysis and insightful recommendations posted by independent analysts on what Sprint Nextel needs to do to fix customer care.  The BW article though paints such a dysfunctional picture.

Some thoughts and observations from recent personal experience and the article:

• If there was a playbook for unintended consequences emanating from perverse incentives that completely countered the goal of excellent customer satisfaction, it is embodied in Sprint's  customer care management practices.  An example:   requiring reps to have quotas for renewing contracts.  From personal experience recently, I attempted to deactivate a Sprint Aircard.  The card was on an internal business account and was still active.  Employee phone care told me I had to go to a store to deactivate (presumably, because they were will on quota to renew contracts and couldn't be bothered with providing other care -- employee care and regular care are now managed by the same group).  The store I went to politely told me that I needed to go to the Reston campus employee store to complete my transaction.  On my third touch with customer care at the campus store this past Monday (by now the BW article was on the web and on newsstands) the rep, although not his responsibility, did pick up the phone and resolved my problem on the spot.  I asked the rep if there had been any reaction to the BW article.  In response, he pulled out a computer printout of the online version of the article and asked, "You mean this?!"  All the reps, by the Monday after this article was published had been given the article. 
• CEO Dan Hesse was interviewed for the article and provided detail regarding his initial management reviews upon taking over a month ago.  Clearly, Hesse wanted to send a message to his company that he understands his task and will do whatever it takes to shock employees, and especially his management, into positive change.  In this case, he went public with this dirty laundry that would NEVER have been exposed under the old leadership and the Sprint legacy mindset. 

Conclusion
Hesse deserves an 'A' for going public to shake up and embarrass entrenched management and the legacy mindset with details of customer care problems.  Cooperating with BusinessWeek on this article was brilliant.  Although the news itself is old, the leadership shown by Hesse is the first tangible sign since taking over that, while there's still much risk for Sprint, there may finally be a real captain on the ship.

Sprint Nextel Watch: Price War! How Should Sprint Nextel Respond?

Related Links: 

UPDATE: Focus Shifts To Sprint Reaction To Unlimited Plans

It’s an unlimited industry now… but what about Sprint Nextel?

Verizon Offers Will Rattle Wireless World
 

Summary

In this article, it is proposed that Sprint has an opportunity to think and act strategically to counteract the Verizon announcement of, if not a price war, then an unlimited calling plan war, by promoting the iDEN network aggressively and expanding Boost Unlimited on the CDMA network.

Analysis

Although there was much buzz in the market about Verizon's announcement on its unlimited calling plan and what it means for the industry in general, to date, Sprint Nextel, unlike its rivals, AT&T and T-Mobile, has been silent in formulating a response.  Sprint had been dabbling with a Boost Unlimited plan in a few markets the past few months.  There had been speculation at that time that a Sprint, desperate to stop its exodus of subscribers, might itself be contemplating starting, or at least signaling intent to start, a costly price war.  If that was the message, and if Verizon was listening, the reaction has been a decisive one.  Whoops, what do we do now, chief?

Verizon, I believe, chose a rational time to announce this unlimited calling plan "war," if it was, in fact, targeted as an offensive move against its wounded rival, Sprint. Indeed, Verizon, AT&T and T-Mobile all reported outstanding net add performance for 4Q07. AT&T and T-Mobile promptly joined Verizon with unlimited plans, arguably to continue to provide an incentive for ongoing growth and, if lucky, inflict pain onto Sprint either in the form of reduced margins and / or a continued erosion of the subscriber base. 

The following proposal might be unconventional, but I believe makes logical sense as Sprint's reaction:

• Roll out an aggressive, perhaps $70 unlimited plan on the iDEN network.  Rationale:  The iDEN network already has excess capacity from subscribers having left for the past two years.  As a result, there are fewer subscribers generating revenue to cover the fixed, let alone variable, costs of operating iDEN.  Thus the incremental costs of adding iDEN subscribers from a network capacity perspective is negligible.  Sprint can use iDEN as an offensive weapon to inflict pain back at its rivals, stanch and potentially reverse the exodus of subscribers, AND prove to a potential buyer of iDEN that, not only is the network viable, but the iDEN asset has become more valuable with more subscribers.  iDEN can be used to spear back at Verizon and the industry, since the incremental costs of doing so are so low.
• Roll out the Boost Unlimited plan nationwide on the CDMA network that matches the Verizon plan as a defensive measure to keep CDMA subscribers at home where they belong, in Kansas.
   

Social Networking Article Follow-Up:

From my post last week on an idea for a social networking tool, I received a url from a trusted reader of the EKTAN to an article titled, "'Friend locator' could become next craze for social networkers", which was launched at the Mobile World Congress in Barcelona.  The idea of a location services overlay onto social networks, like Facebook, might be a boom or bust, but no doubt, some of the location services highlighted in Barcelona as mentioned by this Unstrung article, "Location: It's Creepy, But It's Here."   Privacy issues are clearly an important consideration as the nascent Reese's combination of location and social networking takes off.  In fact, there is a significant and surprising body of research already done on how one might social network anonymously through "Private Information Retrieval" (PIR) algorithms, efforts by Trusted Computing, and others.  Some researchers have devised creative techniques, such as that of MobiEyes of Georgia Tech, with concepts such as "Anonymization-based Location Privacy", which contains, in the second half of the presentation, cool ideas such as "spatial cloaking" and "temporal cloaking."  Ok, nerds, you may now return to your regularly scheduled programming.

THOUGHTS AND COMMENTS, 2/22/08

This has been a busy week for Sprint Nextel and for the industry in general with the (now old news) announcements of the renewed hookup between Sprint Nextel, Clearwire and now Intel.  I wanted to comment on this development, but since it's been over a week since the announcement, all I can say is that I think a potential alliance between these players does nothing to abate the end-game scenario of a Xohm spin-off.  I'm still mulling on the "who would buy iDEN question," and have some thoughts below on what Sprint Nextel should do in response to the price war, or at least, unlimited pricing plan war, initiated by Verizon. 

Some of you also might be interested, if you didn't know already, how the Google Maps function works on the iPhone in providing location information.  The genesis of my curiosity happened a few weeks ago, when I was in New York City to network on behalf of HailCab.  The local inhouse "techie" at the law firm that was hosting us whipped out his iPhone Google map and asked us if we had a demo that would work on his iPhone since he already could track himself moving and was really jazzed up by the functionality.  We didn't have a demo (working on it), but it had perplexed us since that day as to how iPhone was able to get what looked like an offdeck location app to work. 

I happened to be in an Apple store in Bethesda this week and took the opportunity to ask the rep and his answer was that the iPhone "sniffs" RF signals from Wi-Fi hotspots. The iPhone doesn't actually register on these hotspots. Rather, it detects the various signal strengths of all the WiFi networks that it detects and essentially self-locates itself on the Google map. This is how it works without having access to GPS information. Of course, there is a company that has patented this method / technology. The rep didn't remember who it was, but said they had been mentioned at MacWorld.  I ended up taking the lazy approach to verifying this claim and posted the question on Linked-In and got a lot of good private and public answers.  Since I didn't announce to anyone that I might be posting their responses on the EKTAN or the EKTAN blog, nor did I seek permission to do so, I don't feel comfortable even posting anonymous quotes.  I will, however, paraphrase some of the good answers. Essentially, the Apple rep's explanation was correct, using technology from Skyhookwireless. After triangulation is done (or X-angulation, depending on the number of hotspots sniffed), the app maps your location against an existing database of known locations of access points.   Here is a blog entry that explains it more.

Social Networking Tool

Several months ago, while attending a conference sponsored by the Fairfax County Economic Development Authority on the subject of the Creative Economy, I had a brain flash for a tool that would help social networkers get more value out of the many general and specialized social networks in which they are members.

I developed the idea, shared it with many people in my trusted network (including many people on my Newsletter distribution list), people I'd worked with in the past, took their feedback, refined the concept, took a stab at seeing what it would take to get the idea commercialized, posted it on INmobile as a question, received interest from someone in the wireless industry who "got it" and was working on something similar and never heard from them again, and then it took the back burner as other projects came up.  After all these months, I still believe the idea has merit. 

Below are some of my original notes from the conference (I did score a Tom Friedman inscription to the "World is Flat" after he gave one of the keynotes) and follow on analysis.

Is there (or will there be in the future) a need / business opportunity to create a personal social networking tool or console that provides centralized maintenance (i.e., contacts, feeds, etc for various social networking sites) and analysis functions for individuals who are members of multiple specialized social networking sites?  If so, a solution could be achieved through a combination of
1. an extensible   northbound interface (NBI) architecture and interoperability protocol for communication between the console and the different social networking sites.
2. algorithms that would analyze the effectiveness and productivity of social network "ties," building on and codifying the theoretical social networking researchers from the 1940's to today.
3. Social Stream project- or Flock-like centralized console / front end for usability

The idea is to create a tool that is more than an aggregator of other social networking site, but a tool that analyzes the effectiveness and utility of social network connections.

Assumptions:

• People want to maintain different “personalities” or identities on different SNSs
• The greater the number of SNSs a person is a member of, the greater value there would be in a one-stop personal administrative and management console / interface
• The more sites that a person is a member of, the greater need for, and complexity involved in, managing interactions on multiple sites.
• There would be end user value in a tool that simplified administration of multiple site memberships to a degree that additional sites could be joined.

The first working name was SNIP for Social Networking Interop Protocol, but SNIP implies horizontal communication between social networking sites, so the current working name is.... PSNMAT, which is Personal Social Network Management and Analysis Tool.

Selected High Level Requirements:

• Statistics on user interactions – number and “quality” of “transactions” by source (e.g., SNS site, friend) **
• Develop or use algorithms to identify “weak ties” and “tie strength” across social networks **
• “The question that social network designers worry about is, once you can understand network activity on different networks via a single, consolidated interface, how will that affect your own network preferences?” **
• Develop Personal Social network analysis [SNA] tools across multiple networks. SNA “is the mapping and measuring of relationships and flows between people, groups, organizations, computers, web sites, and other information/knowledge processing entities.” Source:

  Social Network Analysis, A Brief Introduction

• Friendly User Interface that masks underlying complexity

** Social Networks And Group Formation, Theoretical Concepts to Leverage

If you'd like to learn more about the architecture, solutions approach, competitive analysis, etc., please contact me.

Sprint Nextel Watch: Governance Issues at the Board and HQ Consolidation

Relevant Links:

 Update 2-Sprint appoints activist investor to board

Sprint consolidates HQ in Kansas 

Summary
Say what you may about the Sprint Nextel ship and its prospects, but the appointment of Ralph Whitworth to the board announced Tuesday (February 12, 2008) on the surface should appear to be regarded as good news.  If one of the key arguments explaining Sprint Nextel's woes lies with management incompetence and strategy, and this malaise has been in place since the merger, there's no better place to start than with the board, right?  In other news, the inevitable consolidation of HQ to Kansas was announced yesterday (February 13, 2008).  How can we interpret this consolidation in the context of the future of the iDEN network?

Analysis

Activist On Board: 

Certainly, Sprint Nextel isn't the only example of bad corporate governance at the board level, nor is it the worst, but the long, sad saga of the company makes it one of the highest profile examples.

According to this source, the major duties of Board of Directors include:

"Major Duties of Board of Directors

Brenda Hanlon, in In Boards We Trust, suggests the following duties (as slightly modified by Carter McNamara to be "nonprofit/for-profit neutral").

1. Provide continuity for the organization
2. Select and appoint a chief executive
3. Govern the organization by broad policies and objectives,
4. Acquire sufficient resources for the organization's operations and to finance the products and services adequately
5. Account to the public for the products and services of the organization and expenditures of its funds"

There has been much additional research on effective corporate governance, governance scorecards, and the relationship of good governance to stock price.  In this research, "board independence and separation of the chairman and CEO posts" are leading measurements and presumed indicators of the effectiveness of boards. However, Beth Young, in writing this article titled, "Corporate governance and firm performance: is there a relationship?" suggests that this presumption or intuitive common sense is inconclusive from empirical study.  She reasons, however, that "The lack of a relationship between board independence and performance across a large number of companies does not, however, mean that increased independence is not the right prescription for any individual company's board," and concludes, "as the academic research shows, there is no governance 'magic bullet,' and no substitute for thoughtful, contextual analysis."

IN the context of Sprint Nextel, it is clear that, through either complacency or incompetence or both, the Sprint Nextel BOD has failed shareholders in the most of the areas defined a their "Major Duties" above. 

In the relevant link above, Walt Piecyk, of Pali Research, is right on in identifying and demanding the ouster of several board members to "improve strategic decision making."  In this context, given the specific names of the board members that he has targeted, I support Walt and say, "let the sackings begin."

HQ in KS, And The Corn Fields Let Out A Sigh

In other news, the long awaited consolidation of HQ to Overland Park has been announced.  One day later (today), late in the trading day as I write this, the stock is down over 3%, giving back most of the gains from the previous day that was in reaction to the appointment of Whitworth to the board.  What gives?  I was thinking about the "who would buy iDEN?" question this morning in the context of the recent departure of the Nextel-legacy execs, Saleh, Angelino and Kelly, and thinking, if iDEN were to be spun-off at all, this trio of execs might have been interested in setting sail in that wooden ship onto the wireless high seas, and thus have hung on.  One logical interpretation is that they left because they were told that relocation to Kansas was inevitable and they didn't want to commit to the move.  On another level though, their departure might also signal a direction contrary to what I've been predicting, which is that iDEN will be spun-off and that the recent surge in iDEN advertising is just a "dressing up for sale" exercise.  If the market believes and interprets that, in totality of all these events, iDEN is going to stay for the long term, and that the sKilled CDMA-based boys and girls in Kansas are going to be managing iDEN in a consolidated HQ, perhaps that is one reason the stock is suffering from the consolidation news. 

Trying to Read the FCC

If there was any uncertainty as to what the editorial board at RCR thinks of FCC Chairman Kevin Martin, check out the picture they chose to run in the front page article of the February 2, 2008, paper edition:



Photo Credit:  UPI PHOTO/ROGER L. WOLLENBERG

Kevin Martin, Chairman of the FCC is on the left.  My first impressions were that he either looks like he giving an obscene gesture to his many critics or has been trying to hitch a ride out of DC for awhile and is getting tired.

Originally posted in:

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EK Telecom Analysis Newsletter, Issue 3, February 9, 2008

Copyright 2008 by Edward Ketchoyian

Some Rights Reserved by Creative Commons License

******green-t@mindspring.com -- 571-233-2909 ********

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Sprint Nextel Watch: Advertising and Branding

Related Links: 
Sprint ad campaign to snub its Nextel brand Posted June 27th 2007

Overview
New advertising and branding initiatives by Sprint Nextel of the iDEN network may be raising more questions than they are answering on future direction of the company.

Analysis
Disclosure: It's stated on Issue 1 of this Newsletter and on my blog that I am a former Sprint Nextel employee.  I have absolutely no inside information, nor have I had any discussions with insiders relating to this analysis.  These are my own hunches and opinions.  I do, however, have a modest (and rapidly diminishing level of) equity in the company from my days as an employee.

If you have been watching Sprint Nextel's advertising and branding activities lately, you will have noticed that since the first of the year, consistent with the January 30, 2008, press release, reaffirming Sprint Nextel's commitment to the iDEN network, advertising for the iDEN network and iDEN Push-To-Talk (PTT) seems to be all Sprint Nextel is advertising, with one exception. 

For the Super Bowl, there was an iDEN PTT ad at the end of the pre-game show.  For that day, iDEN was the underdog to the Sprint Nextel CDMA spot that aired during the game.  Other than that CDMA network spot during the first quarter, iDEN PTT advertising seems to be everwhere there is a Sprint television ad. 

What does this revitalized advertising for PTT mean?  Here are some possibilities:

• New management at Sprint Nextelis walking the talk in backing iDEN for the long term.
• Sprint Nextel is priming the market awareness for PTT in anticipation for the introduction of Qchat PTT later this year.
• Qchat has major problems and, since iDEN, albeit an iDEN with a hemorrhaging subscriber base, hence with lots of excess capacity, is the only PTT contingency plan for a defective Qchat.
• What I've suggested previously:  that the whole iDEN revitalization initiative is a ploy to add value to the network in preparation for a spin-off. A reasonable person might rightfully ask, "Who would buy iDEN?"  I'll noodle on this question and try to provide some thoughts in the future.

While on the subject of branding, as you prepare for the upcoming NASCAR racing season, you will also notice that the Nextel Cup has been officially replaced by Sprint in the Cup Series logo. 

To be blunt, this is a bonehead move in light of the respective Nextel and Sprint demographics and the new, revitalized, reemphasized iDEN network. 

Conclusion
For Sprint Nextel Watchers, the recent moves on branding and the re-emphasis of the iDEN network may be raising more questions than they are answering on the future direction of the company.

Originally posted in:

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EK Telecom Analysis Newsletter, Issue 3, February 9, 2008

Copyright 2008 by Edward Ketchoyian

Some Rights Reserved by Creative Commons License

******green-t@mindspring.com -- 571-233-2909 ********

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Notes from the Breakfast Roundtable Discussion "Mobile Outlook 2008: What's Next in Wireless," Sponsored by Potomac Tech Wire

I attended this breakfast roundtable on Thursday morning, February 7, 2008, after pulling an all-nighter writing requirements for a potential vendor to provide us with a rough order magnitude estimate to develop a demo for our investor pitch.  The eggs were so-so, the bacon was ok, and the coffee was very good.  The event was well attended.  If my table was an indication of the audience makeup, there were both wireless newbies and industry veterans in attendance.  The panel was very good.  Thankfully, no one made reference to their young children in responding to any questions, although Prag Shah rightfully referred to the younger set in general in reference to their Facebook habits when talking about usage patterns and demand. 

In response to a question to the panel on what the most and least hyped trends are in mobile, one panelist, Kevin Bertram, named mobile video as most hyped.  I silently agreed with the assessment, thinking, "Easy answer, and obvious,. too."  Then Tom Wheeler weighed in with a well thought out, historian's long term perspective that disagreed with what the first Mr. Bertram said.  In Mr. Wheeler's long term view, content will, over time, inexorably (my paraphrase) move to mobile video, just certain types of content have moved from print to television.  I'm not sure I agree with this assessment, though.  When people read print or watch television, there is a different dynamic in the relationship between the person and the person's state of mind to the media as compared to mobile video. Thus, "content" may not be from the traditional sources and producers. In my view, a user of mobile video, if and when it develops, may very well need uplink speeds as fast as downlink speeds, unlike the way today's asymmetric broadband networks are designed.  I wrote some not widely read analysis a few months ago from which I will reprint some excerpts:

Mobile TV is still in the early stages of market maturity.  There are interesting services out there, but a fundamental question remains as to how much demand there will be for these services.  If mobile TV takes off, will it be of the streaming live broadcast variety, i.e., will I really care to catch Chris Matthews "Hardball" or the latest on "The View" in real time, or will mobile TV consist more of a TIVO or DVR / on demand service?  Other than for unique, live events, such as a sporting event or an unfolding event of national importance (perhaps if mobile TV existed more than ten years ago, OJ could have watched himself being pursued in real time in his infamous white Bronco slow speed chase), demand for such a service and the burden on infrastructure might at best be localized.  Temporary capacity could be deployed at sporting events where mobile TV demand might be greatest, e.g., in the audience or stadium parking lot, as is done today, or around major cities, if their team happens to make it to the World Series.  (Satellite might be an intriguing solution for this scenario if claims of dynamically allocating capacity over wide geographic areas, as MSV claims, are proven.)

At any rate, though, it's hard to argue that today we are reaching a choke point, since the mobile TV market is still in its infancy.

There are technology alternatives to consider.  One direction that ICO seems to be following is the idea of satellite video to the handset. 4G technologies may also provide adequate bandwidth.  In all cases, though, some form of improvement in compression technology is desirable and needed, as all carriers seek to minimize Capex and Opex.

Now for the fun part.  Where will the burden on infrastructure due to video likely to come from?  Users.  It will come from social networkers.  If there is a way for social networkers to update their sites not just with droll commentary about how they are feeling at 10:11 am on Tuesday or uploading the pic they took at the soccer game but to also broadcast that blind date in real time to all your closest Facebook friends, wow that would be so [insert pithy text message in this space].   This scenario may sound weird to someone from my generation, who may have thought that John Glenn was the embodiment of cool -- but this is the direction in which the kids and technology are heading.  Going out on a limb here, but I will claim that peer-to-peer broadcasting or YouTube-like uploading and downloading to blogs is most likely where the demand will come from.

Rather than "delivering" TV to the phone, future wireless traffic may also require a substantial uplink component.  As others have commented, rightly, in the future, uplink speeds need to be improved as we move towards a world where there's more user generated info being uploaded to the net than is downloaded.

I think it's got something to do with that Flat World thing.

Originally posted in:

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EK Telecom Analysis Newsletter, Issue 3, February 9, 2008

Copyright 2008 by Edward Ketchoyian

Some Rights Reserved by Creative Commons License

******green-t@mindspring.com -- 571-233-2909 ********

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The VC Networking Event

As mentioned in Issue 2, this past week I and my partner in our startup ventured (no pun intended) to New York City to network with Venture Capitalists at an exclusive panel discussion in which money fund / trust asset managers shared their views to VCs and private equity managers on what asset allocation strategies and other objectives the capital investors have in determining what VCs they decide to invest. I think I got that right. 

From a networking perspective, we were and are grateful to our hosts who invited us.  We did make one or two contacts in the crowd and met a couple other startup.  Many of the VCs were more open to late round funding or in being on the buy side.  Oh well. 

My other observation was that, just like wireless carriers and vendors look for products to fill the pipeline for specific apps and sectors, so do capital management and private equity players also look to invest in different sectors to satisfy specific diversification goals and quotas.  For the carrier, for example, there's a need to invest in, and fill the pipeline from, the latest sectors, like broadband, social networking and location-based services.  Similarly, the capital asset investors on the buy side look to make sure that the VCs and PEs they invest in are filling their pipelines in diverse industry sectors per their own risk objectives.

Originally posted in:

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EK Telecom Analysis Newsletter, Issue 3, February 9, 2008

Copyright 2008 by Edward Ketchoyian

Some Rights Reserved by Creative Commons License

******green-t@mindspring.com -- 571-233-2909 ********

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Sprint Nextel Watch: Clearwire Agreement Back On and iDEN Network Affirmed

Related Links: 

Sprint, Clearwire shares rise on WiMax report
Sprint Confirms Commitment to Industry-Leading Push-to-Talk Service

Overview
Big announcements on the Sprint Nextel front this week. Sprint, Clearwire tying up again and the curious announcement on the iDEN network.  Included in the developments was the announcement of a $31B impairment charge, which will not be covered below. 

Analysis
Disclosure: It's stated on Issue 1 of this Newsletter and on my blog that I am a former Sprint Nextel employee.  I have absolutely no inside information, nor have I had any discussions with insiders relating to this analysis.  These are my own hunches and opinions.  I do, however, have a modest (and rapidly diminishing level of) equity in the company from my days as an employee.

That said, there were a couple interesting announcements relating to Sprint Nextel in the past day or so.  One of which was the announcement that the Sprint - Clearwire cooperation arrangement is back on.  Not much to comment on here.  The ongoing dosey doe with Clearwire has probably been for different motivations every dosey.  The initial arrangement might have been made from the Sprint point of view in order to shift risk and costs onto others. However, Barry West had stated publicly weeks before the initial dosey that Sprint had the resources to build the WiMAX network on its own. Perhaps the desire for more ubiquitous coverage may have been a secondary motivation at first, but then made strategic sense when financial music stopped.  The breakup a few months ago was curious again.  I would have thought that Sprint would have stayed the course on WiMAX relationships until a new CEO came on board and had a chance to assess the situation.  At any rate, the Street has never approved of Sprint Nextel's recent go it alone approach.  Consistent with my article in Issue 1 on the Sprint Magical Mystery Tour, I see this tie-up with Clearwire as a first step in a multi-phased spin-off of WiMAX. 

More interesting is the Sprint affirmation of the iDEN network.  Let's break down the politburo press release. 

Starting off by calling the service itself "Nextel Direct Connect" is a change from previous brand positioning, where Sprint Nextel in the not to distant past decided to brand Direct Connect as a service, like voice mail, independent of underlying network technology, in preparation for the rollout of Qchat.  The re-emphasis and change back to  "Nextel" branded Direct Connect means something, but we may have to wait for the next photo of the committee to see who's missing before we can draw conclusions.

Next up, the announcement of new, recently introduced iDEN handsets.  You will notice in recent media advertising that introduction of iDEN handsets with the "i" in the model designation rather than "ic".  A single "i" means that the phone is a single mode, iDEN-only handset.  For awhile, you only saw cheap, lower cost "i" handsets.  Most other models for iDEN were "ic".  An "ic" handset is a dual mode iDEN / CDMA phone.  Sprint currently calls them "hybrid" phones.  A re-emphasis on iDEN-only handsets going forward could, on the one hand, indicate the longer life of iDEN, but the big question here remains:  under whose ownership. 

Then there is this sentence:  "Sprint will also focus on enhancing Nextel Direct Connect in 2008, including aggressively marketing Nextel Direct Connect and expanding features and functionality including combining Direct Connect with Sprint Mobile Broadband data capabilities."  [Emphasis added.]  There has been a brain drain of technical expertise on the Motorola development side for many years now.  The group is a shell of what it once was.  On the Sprint Nextel side, most of the technical talent that was there in the hey-day of iDEN, has either left the company or taken refuge in Xohm, the WiMAX unit.  Few are left to write technical requirements or oversee proprietary iDEN development for end-user features.  What is intriguing is the next part of the phrase though about combining Direct Connect with broadband.  Are we talking about a new dual mode, I mean, hybrid phone, or, perhaps, foreshadowing of a future iDEN / WiMAX device?  I'm not a professional analyst, but if I were, I might be interested in this question on a future earnings call.  Also, if there is an iDEN / WiMAX device in the offing, you might be able to continue to support the theory of a potential iDEN / WiMAX bundled spin.  Of course, at best, the politburo might know, but sometimes, they have no clue either. 

What follows is a review of the value add of Direct Connect, followed by several customer testimonials.  Sounds like a nice network that some people, perhaps an Arab sheik, might find valuable.

Conclusion
If indeed, Sprint Nextel intends to keep iDEN around for the long term, this would be diametrically opposite to what has been the inexorable momentum since the merger closed.  Repeating what was said on the Sprint Nextel Magical Mystery Tour, it's hard to imagine iDEN continuing as a viable network managed from Kansas.  Given that there are strong signals that headquarters will be consolidated in Overland Park, KS., my opinion is that a fresh coat of paint is being brushed on iDEN in preparation for a sale.

Originally posted in:

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EK Telecom Analysis Newsletter, Issue 2, January 31, 2008

Copyright 2008 by Edward Ketchoyian

Some Rights Reserved by Creative Commons License

******green-t@mindspring.com -- 571-233-2909 ********

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