Sprint Benefits from iPad

Sprint doesn't sell the iPad, nor does it have the right to sell 3G connections for iPads. Nevertheless, Sprint says it is benefitting from demand for Apple’s device. The reason is that most iPads seem to be of the Wi-Fi-only variety, and that means a wireless hotspot service adds value.

Dan Hesse, Sprint Nextel chief executive officer says Sprint Nextel has seen an uptick in demand for its "Overdrive MiFi" wireless-hotspot device, as people use it to connect their iPads to the Internet when on the go.

Sprint CEO: The iPad Has Been Good to Us

HTC Incredible, HTC Evo Ship Dates Set up Huge Contest

The Verizon Wireless HTC "Incredible," which sold out on its first day, now is being promised for additional sales on May 14, 2010. The delay pushes back by about 10 days the gap between the next round of Incredible sales and the first wave of HTC "Evo" sales, now slated for either June 6 or June 13, 2010.

The difference sets up a sales war between the Incredible and the Evo, both based on the latest HTC hardware and both using Android. The Evo is a dual-mode 4G and 3G device, though. Verizon Wireless has about a month headstart, but both devices are quite comparable in most respects.

Evo has huge potential for Sprint and Verizon Wireless, as they might finally be devices that can appeal to users who might otherwise default to the Apple iPhone.

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T-Mobile USA Moves to 7.2 Mbps, Plans 21 Mbps

There are times when being late to market is actually a benefit. The latest entrants in any technology-based market have access to the latest technology, and can build their business plans around that fact. There are other times when it's a bit difficult to characterize a particular competitor's position.

That is where T-Mobile USA now sits, for example. T-Mobile USA was the last of the top-four U.S. mobile providers to build a 3G network, and it has uncertain plans for 4G. But the company is on track to have faster versions of 3G up and running before some of its major competitors.

The company had no 3G customers in the second quarter 2008, though it had acquired 3G spectrum. But the 3G network now covers 240 cities and passes 170 million people, with plans to extend coverage to 200 million people by the end of 2009, at which point nearly all major urban areas will be covered.

So here's where the "last shall be first" principle applies.T-Mobile is using the faster 7.2 HSPA air interface, running at 7.2 Mbps downstream, on all its 3G nodes by the end of 2009.

At least one of T-Mobile's primary competitors is upgrading less-capacious 3.6 HSPA networks to 7.2 HSPA, but will not have that conversion completed until the end of 2011.

Likewise, T-Mobile plans to upgrade even the 7.2 HSPA network to HSPA+, a 21 Mbps network. The company says it will start rolling out HSPA+ in 2010. T-Mobile says the upgrade will be a relatively low-cost and relatively easy upgrade.

Of course, the reason T-Mobile's position is complex is that it has not yet announced a specific method for deploying a 4G network, which will require additional spectrum.

Both AT&T and Verizon are building their 4G networks for substantial coverage by 2010, while AT&T will have substantial coverage in 2011. Sprint is banking on the Clearwire network for 4G.

Still, competition in the mobile broadband market might not primarily be about "feeds and speeds." Coverage, pricing, application stores and device exclusivity arguably are more important.

Nor is it yet entirely clear that 4G will offer an entirely new consumer marketing proposition, beyond "faster." European 3G networks languished for years with sluggish uptake because the compelling new services requiring a 3G network were not in place.

In the U.S. market, it has been the mobile Web that has driven an upsurge of 3G uptake. But that adoption was based in part on applications and capabilitiesm, in part on use of particular devices, which require use of the 3G network.

The question for 4G networks is what new value or application will drive uptake.

Perhaps no new discrete driver will be required. Maybe "more" will be sufficient. But as Verizon has so far discovered with its FiOS fiber to the home feature, consumers still need a reason to buy fiber access as compared to hybrid fiber-copper access.

Providers can be last or first. Either way, the applications and device capabilities will remain the drivers of adoption.

Mobile is Not "Too Big to Fail"

Some people set up straw men that are easy to knock down, such as the big, rich telcos and mobile providers. Reality is more complex. They still are big, but they also are businesses facing cannibalization of their core revenue stream, voice, and will have to replace most of that revenue with something else.

We as a nation have made this sort of mistake before, trying to bring more competition to the landline voice business precisely as that business was entering a serious period of decline. Mobile providers now are in the same predicament. No matter how big they are, their base business is going to go away, for the the most part, meaning every single cent of revenue they now earn will have to be replaced.

If you think the telecom business is in great shape you don't work in the business. Granted U.S. wireless data revenues grew five percent quarter over quarter in the third quarter of 2009 and 27 percent year over year, to reach $11.3 billion by the end of the third quarter of 2009, according to analyst Chetan Sharma.

But overall service provider average revenue per user decreased by 14 cents during the third quarter. Average voice ARPU declined by 57 cents per user while the average data ARPU grew by 43 cents.

The point is simply that the communications business already is in the midst of a necessary transition from its traditional revenue models to new models, none of which are assured. It is going to take a great deal of very-hard work to pull this off and while consumer displeasure with such providers is understandable at times, they are not "too big to fail."

Most of that gain in data revenue was realized by Verizon and AT&T, which between them accounted for 80 percent of the increase in data revenues in the third quarter. AT&T and Verizon also now account for 68 percent of the market data services revenues and 61.5 percent of the subscriber base, Sharma says.

AT&T experienced the most growth with a six-percent increase quarter over quarter,  followed by Verizon and Sprint with five percent revenue growth each.

Overall mobile service provider revenue grew about two percent year over year. On an annualized basis, data represents about 28 percent of total mobile service provider revenues.

Analyst Chetan Sharma estimates that by end of 2009, U.S. mobile data traffic is likely to exceed 400 petabytes, up 193 percent from 2008.

Smartphones also now represent 25 percent of U.S. devices in service, says Sharma, while mobile penetration stands at about 91 percent.

The average number of text messages used in the U.S. market now averages almost 568 messages per subscriber per month.

Elections Matter: Competitive Carriers Challenge Telco Wholesale Pricing

In the U.S. communications business, some things don't change, and among those unchanging realities is that competitive local exchange carriers believe they should have widespread rights to use access facilities owned by the former Regional Bell Operating Companies (Qwest, Verizon and AT&T), paying wholesale prices with healthy discounts.

The former RBOCs just as vociferously argue that such access should be available, but not on a mandated basis, and only at market-based rates. Those fights were particularly fierce earlier in the decade, but have been relatively muted over the past several years. But nothing is ever completely settled in the communications business.

Eight competitive communications providers and Comptel have asked the Federal Communications Commission to adopt rules that would lead to lower prices for broadband access and transport. The petition for "expedited rulemaking" will not, as its name suggests, result in anything actually happening very soon.

The request must, by law, be circulated for response, and those responses will be vigorous. The request also comes at a time when larger issues, especially the shape of a new national broadband policy, are being weighed as well.

Comptel, 360networks, Broadview Networks, Cbeyond, Covad Communications, NuVox, PAETEC, Sprint Nextel and tw telecom have asked the FCC to create new procedures that would require the former Bell Operating Companies to offer wholesale access at "going-forward rates," plus a "profit margin or markup" of about 22 percent.

The concept is arcane for anybody who is not a communications policy expert or communications attorney, but essentially boils down to a competitor belief that prices are too high, and that the changed political complexion of the FCC will allow changes more in line with CLEC thinking both on mandatory wholesale and robust discounts on wholesale facilities used by competitors.

The perhaps unstated hope is that the forthcoming national broadband plan might address terms and conditions for mandatory wholesale access to optical broadband facilities owned by the former RBOCs, something competitive providers would dearly like to win, and which existing rules do not support.

Still, the petitioners do not expect immediate action, as the request has to be circulated for public comment, and will, as usual, face heated opposition from Qwest, AT&T and Verizon.

Still, it has to be noted that elections have consequences. The new petition might not have been deemed to have a chance of upside in the previous presidential administration.

Dramatic Shift in Sprint Nextel Net Ads Performance

Not often will you see a sequential change in subscriber additions as Sprint Nextel saw between the fourth quarter of 2008 and the first quarter of 2009.

That isn't to say Sprint Nextel's churn problems are behind it. The company apparently still is losing customers to AT&T and Verizon Communications.

But Sprint Nextel got a boost from Amazon Kindle users and prepaid customers.

In principle, an increase in prepaid, at the expense of postpaid, should put pressure on margins.  So far that does not seem to be a problem. All in all, though, the first quarter was impressive, at least on the metric of net customer additions or losses.

If Sprint Nextel can follow through in the second quarter, it might be an inflection point.

Sprint Narrows Losses; Kindle and Prepaid Help

Sprint Nextel's 182,000 total net subscribers represents a sequential improvement of over one million subscribers and the best sequential net change in total subscribers in Sprint Nextel history, says Hesse.

Sprint Nextel appears to be having success adding prepaid customers, a trend noticeable at some other wireless firms, as well as with its wholesale business, driven in part by Amazon Kindle subscriptions.

Sprint Nextel had 49.1 million customers at the end of the quarter, compared to 49.3 million at the end of 2008. This includes 35.4 million post-paid subscribers (25.3 million on CDMA, 8.9 million on iDEN, and 1.2 million Power Source users who utilize both networks), 4.3 million prepaid subscribers (3.5 million on iDEN and 800,000 on CDMA) and 9.4 million wholesale and affiliate subscribers.

In the first quarter, total wireless customers declined by approximately 182,000, including net losses of 1.25 million post-paid customers – comprising 531,000 CDMA and 719,000 iDEN customers (including a net 94,000 customers who transferred from the iDEN network to the CDMA network).

The company also lost 90,000 prepaid CDMA customers. The company gained a net 764,000 prepaid iDEN customers and 394,000 wholesale and affiliate subscribers. The company achieved total subscriber growth on the iDEN network.

Wireless service revenues for the quarter of $6.4 billion declined 10 percent  year-over-year and two percent quarter over quarter.

Wireless post-paid ARPU in the quarter was stable sequentially and year-over-year at $56, primarily due to growth in fixed-rate bundled plans such as "Simply Everything," offset by seasonal declines in usage.

Data revenues contributed greater than $15 to overall post-paid ARPU in the first quarter, led by growth in CDMA data ARPU. CDMA data ARPU inow represents more than 31 percent of total CDMA ARPU.

Prepaid ARPU in the quarter was approximately $31 compared to $29 in the year-ago period and $30 in the fourth quarter of 2008. The year-over-year and sequential increases reflect a growing contribution from prepaid subscribers on unlimited plans.

Sprint Mogul to Use Rev A Broadband

Sprint is releasing a software update for the Mogul phone, made by HTC Corp. of Taiwan, that will enable the phone to connect at Rev. A speeds.

Downloads speeds should be 600 kilobits per second to 1,400 kbps, up from a range of 400 kbps to 700 kbps with Rev. 0.

It will be capable of uploads of 350 to 500 kbps, up from 50 kbps to 70 kbps.

Sprint to Spin off Nextel?

The Notable Calls blog reports a "curious" rumor that Sprint Nextel Corp. has hired Morgan Stanley and initiated director Ralph V. Whitworth's plan to spin-off Nextel, with a formal announcement possibly coming in two to four weeks. Some undoubtedly will say this is a mistake.

Others, including me, will argue that if the choice is to ditch Nextel or the Xohm WiMAX network, Nextel has to go. Sprint already has taken the hit and essentially written off the entire value of the Nextel acquisition.

If it spins off Nextel, Sprint reduces the complexity of running two separate networks, with two sets of consumer devices and support operations to support, as it builds yet a third network.

Once upon a time Nextel boasted the highed average revenue per user in the business. That isn't much of an argument these days as the ARPU difference now has narrowed almost to the point of insignificance.

True, Nextel's customer base always was weighted more heavily towards business users, which is valuable, but Sprint's churn problems are disproportionately related to Nextel, these days. In the right hands, with a management unburdened by the other distractions Sprint has, something can be done about Nextel.

But it won't be easy. Nextel is the only carrier running the iDEN air interface, and Motorola is a key handset supplier. The former issue means handset scale isn't going to be there, so device costs won't be easy to manage. And Motorola itself wants to get out of the handset business, but so far seems to be finding few takers.

Potential WiMAX suppliers, on the other hand, are potentially much larger, and Google is among the firms active in supporting Sprint's Xohm initiative. Sprint already has taken the accounting charge related to the Nextel acquisition.

Spinning Nextel off also will simplify the previously-announced plan to finally consolidate headquarters operations in Kansas City, instead of maintaining two separate headquarters operations, one in Reston, Va. and one in Kansas City.

It's only a rumor at this point. But Sprint has to take drastic steps. It cannot incrementally creep back to health.

T-Mobile Handles Churn

Though it doesn't appear T-Mobile USA will be changing its market share position in the near term, it appears to be doing a good job on the churn front.

It added 951,000 net new customers added in the fourth quarter of 2007, up from 901,000 in the fourth quarter of 2006. That's important because "net" adds are what one has left after deducting the customers who churned away in any given time period. The other data point is that, in its most-recent quarter, T-Mobile's churn dropped to 1.8 percent, down from 2.1 percent in the fourth quarter of 2006.'

That is notable because T-Mobile has a large percentage of contracts that are of the one-year variey, not the the two-year contracts that increasingly are the norm in the postpaid segment of the market. It also is notable because there is some evidence T-Mobile customers are more active than customers of some of the other leading mobile carriers in investigating alternatives.

"T-Mobile customers are the most active in checking out competitive products and services," says Compete.com analyst Jeff Hull.

"This is partly because they are a younger, more active subscriber base, and partly because of the legacy of one-year contracts at T-Mobile," says Hull.

"If you look at an upstart like Helio, four percent of their site traffic is from existing T-Mobile customers, with two percent from both AT&T and Verizon Wireless, and Sprint/Nextel customers seemingly uninterested in checking out the MVNO."

T-Mobile customers also are over-represented at the Boost Mobile site, another youth oriented brand that is successfully attracting T-Mobile user interest. At the margin, and it might only be at the margin, there does seem to be a difference between customer bases at T-Mobile and Sprint or Nextel, for example.

Given the apparent high "shopping" and "comparison" behavior, the lower churn is an accomplishment.

Sprint Unlimited Plan: Unlimited Everything

Sprint Nextel now has responded with a new “Simply Everything” plan offering not just talk, not just unlimited texting, but unlimited Web surfing, email access, GPS navigation services, DirectConnect, GroupConnect, Sprint TV and Sprint music.

The $99.99 Simply Everything plan is available to customers on both Sprint's CDMA and iDEN networks, and goes way beyond T-Mobile's comparable plan that includes unlimited voice and texting.

Sprint has thrown in the kitchen sink.

Existing Sprint customers can switch to the Simply Everything plan without extending their current contract either by contacting Sprint customer service or by stopping by any participating Sprint retail location.

New line activations require a two-year agreement.

For families, Simply Everything includes an incremental $5 discount for each incremental line, up to five lines on the same bill. For example, two lines would amount to $194.98 ($99.99 + $94.99); a third line would cost an additional $89.99. This is in sharp contrast to the multi-line unlimited rates offered by some competitors. The Sprint plan offers significant savings the more lines a customer adds.

Observers were wondering whether Sprint would go nuclear. This move is more "nuclear" that offering an unlimited voice plan for lower prices than the now-industry-standard $100 a month. Sure, Sprint Nextel would have frightened a lot of people if it had gone with an $60, or even an $80 unlimited voice plan.

What it has done, at least for users who really like several of the enhanced features, is create a package so compelling lots of people are going to upgrade lower-priced plans to get them. Don't worry about some high-end voice plans being downgraded.

The big issue here is a potentially significant upgrade of lots of other plans, to get the huge palatte of upgraded features. It is the sort of move one would expect from Dan Hesse.

For users who don't mind the lack of subscriber information modules (SIMs), the plan offers more value than competing plans offered by T-Mobile, which bundles unlimited voice and text messaging. Both at&t Wireless and Verizon Wireless plans provide unlimited voice for $100 a month.

For users who simply want unlimited voice, Sprint will offer a $90 voice-only plan. So far, the feared price war has not broken out.

As for why unlimited plans might not damage wireless carrier revenue, take a look at what Sprint has been finding with its Boost mobile prepaid business. After launching unlimited plans, traditional prepaid growth slowed, but unlimited plans more than made up for the slower growth for the traditional plans.

Dan Hesse, Digital One Rate

Dan Hesse, Sprint Nextel CEO, was CEO of AT&T Wireless Services back in 1998, not many will recall. That was the month Hesse was able to act on a vision he had strenuously to sell to his superiors: that wireline minutes of use could be shifted to wireless, saving at&t money on access fees by doing so.

The Digital One Rate Plan was not primarily aimed against other wireless carriers at all, but rather at reducing a significant cost of doing business on the AT&T long distance side of the house.

At the time, Hesse pointed out that "we're taking a chunk out of revenue usually going to our competitors," meaning by that the Regional Bell Operating Companies that at&t had to pay access fees to.

The point is that major packaging initiatives can have unanticipated consequences. Digital One Rate was just a way to save AT&T long distance operations money on terminating traffic charges paid out to local carriers.

So make no mistake: Hesse is used to launching unusual packaging programs for non-intuitive reasons. But not even Hesse was able to fathom that Digital One Rate would change the way the entire industry packaged its basic product.

If Sprint does launch some sort of "nuclear" strategy to try and shake things up, you can bet Hesse isn't going to choose some sort of simple copycat unlimited calling plan.

Dan Hesse is the guy who got the whole "buckets of minutes" train rolling, and wiped out the difference between local and long distance calling in the U.S. domestic market.

He's the guy who triggered an explosion of mobile adoption and a sharp increase in usage of mobile minutes.

Financial analysts seem to be riveted on what a $60 unlimited calling plan might mean for the fortunes of all leading wireless providers. I don't think that is what they ought to be focusing on. Digital One Rate was about moving "long distance" minutes from the landline network to the wireless network.

That's what "unlimited" mobile calling plans do. That's why Sprint is testing femtocell technology in Denver: figuring out the operational and marketing issues around small in-home transmitters that improve wireless signal quality and also create a marketing opportunity for "home zone" services where a wireless handset can replace a landline handset and service.

Nobody should be surprised if Sprint Nextel comes out with a program of its own in the "unlimited" calling area. But nobody should expect Hesse to confine his initiatives there. At this point, rolling out its own unlimited-calling plan is nothing more than a tactical response to prevailing market conditions on the packaging front.

It isn't the sort of industry-transforming plan Digital One Rate was. But we also need to keep in mind that industry transformation was not what AT&T had in mind in launching Digital One Rate.

Watch out for the unintended consequences.

More Funding for U.S. WiMAX?

Sprint Nextel and Clearwire are close to announcing the formation of a WiMax joint venture funded in part by a $2 billion injection from Intel Capital, the Street.com reports. As currently rumored, the deal would create a new company that pools Sprint and Clearwire licenses in the 2.5-gigahertz wireless spectrum. Additional financing also is expected from other firms.

An earlier partnership between Sprint and Clearwire died last November, when the two parties could not reach agreement on terms of the partnership.

Through a joint venture with Clearwire and a big investment from Intel, Sprint can move the expenses off its books and yet still continue to build a fourth generation network. Intel's interest in WiMAX is creating a new market for chipsets supporting WiMAX devices, including mobile PCs and handsets.

The unusually large investment by Intel Capital, which hasn't invested so much in any single company before, seems to be a signal that Intel worries about the U.S. WiMAX market. Though at one point it might have been conceivable that large incumbent wireless carriers might move to WiMAX on a wider scale, at&t Wireless and Verizon Communications now say they will back Long Term Evolution as the basis for their fourth-generation networks.

The issue is that WiMAX and LTE are different ways of creating capabilities seen as integral for 4G networks, so if Verizon and at&t aren't going to be creating WiMAX networks, Intel has to look elsewhere. T-Mobile USA, the fourth-largest U.S. mobile provider, is a logical candidate to go with LTE as well, as most of the GSM-based network providers seem to prefer that approach.

Aside from that strategic consideration, Clearwire 's part, the deal would provide cash it needs to continue operating and building its network.
Clearwire had about $1 billion in cash and investments at the end of the September quarter, but burned through about $400 million in cash to fund operations in that quarter, according to the company's most recent quarterly filing.

Magnitude of Nextel Blunder

In its most-recent 8K filing with the Securities and Exchange Commission, Sprint Nextel Corp. says it may have to write off the full value of the $31 billion worth of "goodwill" carried on its books as an asset related to the Nextel acquisition. The move will not affect Sprint Nextel's cash balance or future cash flows but will affect the company's statement of assets.

One way of looking at the impact of the overpayment is to analyze the former Nextel's contribution to Sprint Nextel's overall business. In the most-recent quarter, Sprint Nextel reported $8.04 billion worth of service revenues, of which the former Nextel business contributed 35 percent, or about $2.6 billion. On an annualized basis, call that $10.3 billion of gross revenue.

Sprint's profit margin on wireless services is about 32.4 percent. So call the former Nextel profit as $3.3 billion a year. The magnitude of the overpayment is 9.4 times the annual profit from owning the business.

Sprint Made a $31 Billion Mistake Buying Nextel

In its most-recent 8K filing with the Securities and Exchange Commission, Sprint Nextel Corp. says it may have to write off the full value of the $31 billion worth of "goodwill" carried on its books as an asset related to the Nextel acquisition. The move will not afect Sprint Nextel's cash balance or future cash flows but will affect the company's statement of assets.

The coming write down essentially means Sprint overpaid $31 billion to acquire Nextel. Blunders of that magnitude often are enough to spell the end of independent life for any corporation that makes such a sizable mistake.

Four More VoIP Patent Infringement Suits

As many of us had feared, if Vonage is infringing patents, why aren't other independent VoIP providers doing so as well? Well, we now have a possible answer. Sprint Nextel Corp. is suing four competitive VoIP providers for the same patent infringements Vonage has been found to infringe. Sprint has sued NuVox Communications, Broadvox Holdings Paetec and Big River Telephone Co.

On the heels of Verizon's new lawsuit against Cox Enterprises for VoIP patent infringement, we might be seeing the materialization of the threat. Executives in the competitive VoIP community have privately worried about just such a turn of events for some time. It now looks as though those fears are justified.

Justin McLain, Endeavor Telecom CEO, partly in jest (but only partly) recently said at a panel at the Internet Telephony Expo that any independent, "over the top" VoIP provider had better have all the funding they need for 24 months, because if not, the companies will fold within that period. "You might want to look for another job," McLain said, again partly in jest, but only partly.

Competing against well-established providers who own their own access facilities and have huge customer bases, plus the ability to bundle entertainment video and broadband access or mobile services simply is going to be too tough, at least in the consumer market segment.

"No bring your own broadband provider really is successful," McLain said. In fact, a good part of any independent provider's success in the consumer market is driven to a large extent by customers who recently have immigrated to the United States and have high needs for international calling back to their home countries, McLain says.

Some other part of the market is composed of price-conscious callers, but the problem is that the average revenue per user a provider can generate from that segment is not enough to support a business, says Sanford McMurtree, RNK Communications VP.

Among the other possible changes in strategy are a shift to multi-level marketing on the Amway pattern, says Gary Coben, deltathree director. "For all the money spent marketing VoIP services, there aren't that many customers," Coben says. "That means people aren't comfortable buying."

It looks to be a tough year for independent VoIP providers who cannot reposition from a consumer focus to serve smaller business customers.

Qwest Plans No Major Acquisitions or IPTV

After completing a months-long stratgic review, Qwest Communications essentially has decided to "stay the course." There will be "no major shifts" in Qwest's basic approach to the market.

People shouldn't expect major acquisitions or a massive move into IPTV, for example. Instead, Qwest seems to be focusing on a balance between capital investment and shareholder return issues, such as reducing debt load, buying back shares and supporting the payment of dividends.

Partnerships are the way Qwest will provide new services in areas such as video and wireless. That's good news for Sprint, who provides Qwest mobility services, and DirecTV for video entertainment. It also means Qwest will be receptive to other partnerships as well.

"We are looking at partnerships to help us with offerings in the home," Mueller says. "Partners will be a huge part of our success, going forward."

But Qwest will not be looking to make major acquisitions, or dramatically change the rate at which it invests in broadband access, undertaking a major fiber-to-home initiative, for example, though it is increasing its "fiber-to-node" efforts in a relatively controlled way.

Qwest expects by 2011 to increase its broadband penetration to increase from 23 percent to 40 percent, with higher access speeds and a nominal increase in operating costs.

The fiber-to-node deployments are not, Mueller emphasized, related to IPTV, but rather to data services. "Qwest doesn't have the scale" for that, Mueller says.

But fixed-mobile products will be launched in late 2008, to leverage the broadband access investments.

Overall, Qwest will attempt to balance capital investment with returns to shareholders, as one would conclude given Qwest's resumption of dividend payments.

Capital run rates now set at about $1.8 billion are a "good run rate for us," Edward Mueller, Qwest CEO says. "We are trying to minimize capex where it doesn't drive growth," he says. "We will try, in the network operation, be picky and minimize capital expenditures in the outside plant where it doesn't make a reasonable return for us." There also will be a bigger emphasis on "success-based" capital investment, in the enterprise space, for example.

Qwest will focus in 20 markets, including its 10-largest markets, for the FTTN upgrades. Those upgrades might include support for gaming services rather than entertainment video, with the 20 Mbps downstream access capabilities the FTTN upgrade will support. Qwest earlier had said it would spend an incremental $175 per home passed to put the FTTN network in place for 1.5 million homes.

Qwest says it will focus its wholesale efforts on "profitable expansion," suggesting a "success-based" approach to out-of-region enterprise services. The hosting part of our business has promise, Mueller says.

Watch T-Mobile

T-Mobile is going to be the first U.S. wireless provider to offer Android-powered phones next year. It is going to be first because it already has been working to develop such phones with Google and because it has powerful incentives to do something really dramatic to close the gap between itself and the other three major mobile providers. Put simply, it has got to take more chances and gamble more.

And oddly enough for the carrier with the least broadband capability (T-Mobile hasn't yet deployed its third generation network and the others have, T-Mobile might be launching a major push for Web-centric services. If the big opportunity not yet dominated by anybody else is the mobile Web, it's a major chance for T-Mobile to establish a new position for itself in the marketplace.

Once positioned at the "more minutes, less money" end of the spectrum, T-Mobile over the past several years has gotten more traction as a provider of "trendy" devices with an image to match. Pushing hard on the Android front is just another step in that direction.

T-Mobile also has been innovative on the services and packaging front. Its "myFaves" program allows unlimited calling to any other five numbers: not numbers supplied by T-Mobile--any other numbers.

T-Mobile also has been first to offer "HotSpot at Home," a dual-mode service allowing unlimited calling from the home Wi-Fi zone or any T-Mobile HotSpot. And though I continue to think the problem with dual-mode services is handset limitations, "HotSpot at Home" supports the BlackBerry Curve, one of the few devices I actually would consider using. So call T-Mobile remarkably prescient or lucky.

T-Mobile also worked closely with HTC, we are told, on the "Shadow," a "slide-out keypad" device with the "no keys" look that is becoming more popular.

The point is that T-Mobile is powerfully motivated to push the innovation envelope because it simply has to. That's going to be good for users. Watch T-Mobile.

Good News for Sprint

It's a good thing for Sprint that it is working with Google on a Gphone probably available next year. It might not help with Nextel churn, but it will increase Sprint's attractiveness as a provider of CDMA-based Web devices, which is what I believe the new category will shake out to be. Sprint long has prided itself as a provider of advanced mobile data services so this was almost a "must."

It will be a very tough choice, but I still think Sprint has to proceed with the WiMAX rollout and think seriously about divesting Nextel if that is what it takes. Nextel used to lead the industry in ARPU by quite some measure, but the delta is pretty small, and declining. If that was the reason for the buy, I'm not sure it makes much sense anymore. WiMAX is a better strategic use of capital, and Sprint already is working with Google on that front, in terms of optimizing Web application performance. Well, Google apps at least. But those are some of the more important Web apps overall.

As someone who uses services and devices from at&t, Verizon, T-Mobile and Sprint, Sprint has for some time been on the "switch these two phones to somebody else" list. Right now, the issue is simply that the old plan we use is so cheap, relative to the others, that we put up with the service.

But Sprint's devices are the lightest-used of all the other services, so it is a reasonable trade-off. Also, my wife is such a light user that she doesn't care about features other than "calling." I won't buy phones that don't use SIMs. Data cards suffer from no such criteria, which explains Verizon. Still, I can't see using four providers in 12 months time.

But that's just me. Being part of the Google ecosystem is a good thing for Sprint.

Sprint Loses CEO; 337,000 Subs

Sprint Nextel says it expects to report a net loss of approximately 337,000 post-paid subscribers in the third quarter, and also announced the resignation of CEO Gary Forsee. Perhaps the company has spent too much time on the WiMAX network is hasn't yet built, and too little time stemming serious subscriber losses in the voice and third generation business it does have.