EK Telecom Analysis Newsletter

Author of EKTAN Accepted into GLG Leader Program

Yes, it's self serving and I've been away and busy for the past couple months, but I wanted to share that last week I was invited into the GLG Leader Program, based on my work with Gerson Lehrman Group Clients. Only Council Members who achieve a CouncilRank™ in the top 5% of the GLG global network are eligible to join this elite program.  I'll try to have the GLG widget on the side of the blog updated soon. 

There's a lot happening in telecom these days, especially with Sprint Nextel.  I'll try to get some thoughts up there in the coming week.  It looks to me like it might be possible for some imminent news forthcoming regarding the iDEN network. 

THOUGHTS AND COMMENTS, 4/28/08

The last newsletter was published on March 28, 2008.  This issue contains four articles, one of which has been reprinted at seekingalpha.com.  My author biography and an index of articles is at:  http://seekingalpha.com/author/ed-ketchoyian. These are practically identical to the articles here at the EKTAN, but at Seeking Alpha, there have been some very interesting comments.   In the last month, my article on Dan Hesse was included in Wikinvest. 

Although I didn't go to CTIA, I've spoken to a number of colleagues who did.  The impression I get from my limited and biased sample is that the show this year was high on professional networking opportunities, but that the wireless industry is lacking a focus on the next big thing.  Notwithstanding the buzz on the ongoing WiMAX vs. LTE religious war, if you are an old school wireless pro from years past, you'd be looking for major announcements that involved spectrum, major infrastructure equipment deals that resulted in commitments of billions of dollars for new or upgraded technology, a blockbuster partnership deal deal, or maybe even an iPhone-type device announcement (iPhone derivatives, such as an iPhone "killer" don't count).  None of which happened, leaving some of the colleagues questioning their own future in the industry. 

Sprint Nextel continues to look for partners to share the cost of the WiMAX rollout, which will undoubtedly cost several billion dollars, but still has no takers.  Given the credit markets being what they are and, for intents and purposes, a recession in place, major deals that might have been possible six months ago, seem like longer shots now.  The prospect of Sprint spinning off WiMAX completely to Clearwire or iDEN or being taken over outright, given the intrinsic value of Sprint's spectrum holdings alone, may not happen now in the short term, due to macroeconomic conditions.  This situation may end up being a blessing in disguise for CEO Dan Hesse and any Sprint Nextel partisans who wish for the company to remain independent; new management gets some breathing room to turn around the company.  Short of transplanting headquarters from Kansas to a location where leadership actually has to care about employee satisfaction because there is a market alternative for good talent (rather than knowing that the best alternative is working for H&R Block, Hallmark Cards, Applebees, McDonald's or back to the farm, which has fostered a culture based on fear for one's job security and having the right political connections over self-initiative), or a wholesale change of entrenched management, it's hard to envision a near term solution to the Sprint malaise with the current lineup.  I continue to be a fan of Dan Hesse and believe he is capable, but turning around Sprint is more than a one or two person job.  If Dan Hesse is successful in turning around Sprint Nextel, then he deserves to be enshrined with Lou Gerstner and Lee Iacocca in the annals of against-the-odds business turnarounds. 

As for the rest of the industry, the big impacts for the future should be, if I'm a vendor, equipment awards from winners of 700 MHz spectrum.  However, since the rollout requirements the 700 MHz spectrum are so liberal, i.e., stretched out over several years starting next year when the television broadcasters cease using the spectrum, any major equipment awards and deployments are still well over a year out and will be stretched for three to four years after that.  Compared to motivated initial deployments of other networks and technologies in wireless industry past that took between eighteen months to three years from the time of spectrum being awarded, I'd be concerned to be a wireless equipment vendor to U.S. carriers from a revenue perspective for the next few years.

So, where's the money?  Will there ever again be a need for the same level of wireless technical field installation nomads, living on the road for almost a year at a time, doing construction work to build greenfield wireless networks when establishing coverage in newly won spectrum was like staking settling land on a new frontier, or will these people be recorded in history in a documentary style that recalls the men who built landmarks like the Golden Gate Bridge, i.e., who existed in a bygone era in the day when making $5 a day was considered good pay?  Being in the field building wireless networks wasn't glamorous work and I wasn't one of them, but I know a lot of people who nevertheless reminisce fondly on those times. 

There's a lot of buzz out there on mobile social networking, location services, mobile video, next generation bandwidth, quadruple plays, ATC, mobile search, mobile advertising, open networks / Android, wireless internet, etc.  These options are so far, for the most part, unrealized promises or "futures".   Whatever the "it" ends up being, I believe it will be something unique to wireless, rather than an adaptation or migration of an existing service or capability from another medium.  "It" will also be something that has unique utility to consumers that will primarily be useful to them when in a mobile state and has limited value if it is substituted by a fixed version.  "It" will also be something that marketers will be anticipate, but that which consumers will decide where the value resides.  My vote for "it" according to this criteria is for navigation and location services.

My stated goal is to publish one article a week.  It turns out that I'm achieving that goal, but on an asymmetric basis, i.e., a burst of four or so articles every three or four weeks.  I'll work on my level loading going forward.  I also intend on republishing some guest articles from analysts I believe product unique, quality and non-widely available analysis.   I'm continuing to mull on the following topics for future articles, besides the popular Sprint Nextel Watch series: LTE deployment issues, 700 MHz post-auction analysis, Motorola, and a suggested topic called Near Field Communications. 

You may have to check the sonicblues.typepad.com every now and then or subscribe to the RSS feed to get fresher material. 

Other Feedback on EKTAN

I've gotten a number of positive comments from people on my email distribution list and wanted to share some here:

Anonymous:  "Thanks for sending this to me.  Great collection of articles!"
Anonymous:  "Even though I have moved on to tolling and transport revenue, I enjoy the connection to the wireless industry your newsletter provides me."

EKTAN Feedback on the Web: The Navel Gazing Post

Well, this has been a busy week.  Not for adding analysis and content to the EKTAN, that's for sure.  Rather, it's been interesting to track the two posts, my first "pillar" post of the EKTAN, "One Scenario for Sprint's Long Term Future" and the more recent "Undoing the Sprint Nextel Merger," from the EKTAN that I've made to Seeking Alpha.com.  I've submitted a third article also that will probably hit the web site in the next day on the "How Low Can The Sprint Stock Go" post.   In this post, I wanted to repeat a smattering of where these articles end up, once they get posted on analysis sites that get real traffic and some comments and feedback.

As of now, the "Undoing" article has received 27 comments on Seeking Alpha.  There's been a very interesting debate, some of it logical.  Same thing for the "One Scenario" article, which received 16 comments.  All of these comments include those from a particular profane and emotional Sprint defender, who has had at least one offensive and vulgar comment deleted at my request. 

The day that Undoing was posted on Seeking Alpha, Contributing Editor Gary Kim, of TMCnet.com, picked up on my piece, wrote an article on it, titled, "Could Nextel be Spun Off?" and referred to my post.  Thank you, Gary. 

If you go to Yahoo Finance and get a quote for Sprint, you will see the "Undoing" Seeking Alpha article in the blog section.

Also, on Yahoo message boards, someone pasted my "One Scenario" article there, to which a thoughtful poster commented the following (edited for space):

I'm sorry but Ed Ketchoyian needs to take off the rose colored glass and put down the pipe. His basis and conclusions are all over the place and just simply incorrect.   Anyone with half a brain and that knows anything  about the wireless industry can pick this "article"  apart.    SN will not spin off  iDEN.  SN will not spin off WiMax (they will gain outside  investment).  SN will not be bought by VZ, regardless of voice 4G  path.  Sometimes Seeking Alpha articles need to be taken  with a huge dose of  salt.

My pipe has been unused for several years.

The articles were also picked up by FinanceMart,CNBC.com, Wikio News, and a site that indexes blogs based on some key words.  In this case, the word "abscess" was picked up and the "One Scenario" article was listed with a bunch of medical articles describing the different kinds of abscesses you can develop on your body.

"Undoing" also somehow got listed on Social Picks. 

Clearly, many of these sites pick up the feed from Seeking Alpha. 

EKTAN Debuts on Seeking Alpha

I just wanted to let you all know that I submitted my first blog article A Sprint Magical Mystery Tour: One Scenario for the Long Term Future to the website Seeking Alpha.  The article can be found here.  If you haven't been referred to this my blog from Seeking Alpha, I recommend checking out some of the lengthy and interesting comments that some readers have made on the article at Seeking Alpha.

There were some negative comments initially, but then I noticed some of the naysayers were people who defend Sprint and put down other people who write about the company in order to diminish their credibility.  I've been on the chat boards for many years, including the political ones, so I'm familiar with this particular breed.  It's funny, because there's also the opposite side as well.  All my article does is provide a canvas for these ongoing battles to continue. 

Anyway, those were the initial comments.  There were more lengthy and thoughtful comments as well and these are the ones I recommend checking out.