Reveling in positive first quarter, Sprint is bullish

Sprint PCS Group technology and business officials here are gung-ho about the promise of third-generation wireless capabilities for business users, which will begin to roll out by the end of this year and will be nationwide by mid-2002.

Third-generation wireless, known as 3G, refers to an industrywide push to bring dramatically faster data speeds to wireless networks. Sprint's Code Division Multiple Access (CDMA) technology will increase connection speeds 10 times, from 14.4K bit/sec. to 144K bit/sec. Verizon Wireless Inc. and AT&T Wireless Services Inc. are promising similar rollouts by year's end.

Analysts are dubious of all the carriers' projections, but at least Sprint is delivering on some of its recent promises. For example, the wireless division of Sprint exceeded analysts' expectations for new subscribers and revenue in its first-quarter earnings report yesterday.

Sprint added about 875,000 customers in the first quarter, far above some analyst predictions of 700,000. And revenue for wireless totaled US$2.05 billion, up from $1.22 billion for the first quarter of 2000. The wireline side of Sprint, meanwhile, saw a 1 percent decline in revenue, with $4.36 billion compared with $4.4 billion for the first quarter of 2000.

Average revenue per user at Sprint was $60, above analysts' predictions of $59. However, despite all the talk about the value of wireless Web access from handhelds and other devices, only about $1 of the $60 in average revenue per user was from wireless Web usage.

Wireless Web revenue will grow, especially as more users find that it is as much as 10 times faster under 3G to receive e-mail or short messages or even to access a corporate database, said Jay Highley, vice president of business marketing at Sprint PCS.

"Content will be easier to access, and all customers, including voice customers, will see improved network capacity," Highley said in an interview. "Everybody has been talking about what is the killer app with wireless for business for a long time. Well, the killer app for a business sits right on the desktop, but people outside the office can't get to it."

Sprint is already rolling out wireless voice and data and shared pricing plans to "hundreds" of enterprise customers and expects greater interest as 3G bandwidth approaches, he said.

Analysts and some users are still wary about spending money to bring corporate data to handhelds in a wireless fashion, partly because of worries that 3G will require them to scrap old phones or find network providers that have a comprehensive nationwide network.

Alan Reiter, an analyst at Mobile Wireless and Internet Computing in Chevy Chase, Md., said Sprint still ranks no higher than third place for nationwide coverage in the minds of users.

But Highley said Sprint's network is comprehensive, serving 80 percent of the U.S. population. "Our reputation is that we're not comprehensive, but that's because we're a young company," he said.

Susan Norris, assistant vice president for network systems, said Sprint's 3G plans don't require users to throw out old equipment. "It's backwards-compatible," she said.

Analysts are also wary of advertised 3G speeds, saying that the effective user speeds will be much lower and that the maximum speeds won't work in both directions on the network. Norris said a user's actual speed with 3G will depend on how complex the application is, where the user is in the network and how many other users are simultaneously connected on that part of the network.

Some analysts also expressed a dim view of whether corporate users will want or need streaming video or audio to phones. "It's far-fetched," said IDC analyst Kevin Burden in an interview.

Yet, Highley said, corporations that are highly dependent upon streaming media, such as The Boeing Co. in Seattle, will want to bring such content to handhelds or laptops that work wirelessly.

Both Highley and Norris said Sprint isn't worried about spending money to buy additional wireless spectrum from the Federal Communications Commission, even though some analysts and carriers are urging the FCC to liberalize ways for carriers to get more wireless bandwidth. "We have enough spectrum for 10 years," Norris said.

The big reason is that CDMA technology can provide high-speed throughput with less usage than other technologies, and up to one-fourth the spectrum required by wideband CDMA, Norris said.

While fast connections might matter, analysts and users said latency in wireless connections is a bigger worry. In other words, a user can tap an icon to get data from a Web site, but servers at the Web site and the processing at the phone or handheld will take up precious time.

"We're working on the latency worries," Norris said.

And while many investors are wary of high-tech stocks, Highley believes Sprint wireless services could do well amid an economic downturn. "I'm more bullish about wireless now," he said. "That's because oftentimes turning to technology is a way to gain advantage when other means might fail."

Norris said IT managers need to begin trials with wireless applications now. "The wireless skeptics need to start planning," she urged.

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