Sprint Corp. last week announced that it's pulling the plug on ION, its converged communications system, and putting a hold on sales of its broadband fixed wireless service until "substantial progress" is made in developing a new version of that technology.
Sprint said it will try to transition users of its Integrated On-Demand Network (ION) service to other technologies. The 400 corporate customers that now use ION will be redirected to the company's Asynchronous Transfer Mode (ATM) and virtual private network services, said a Sprint spokesman.
ION, which was introduced three years ago, is an ATM-based service that's designed to handle voice, data and video communications on a single network. But the company spokesman said it would have taken as many as three more years to make ION profitable.
A few large companies, including Hallmark Cards Inc. in Kansas City, Mo., and Yellow Freight System Inc. in Overland Park, Kan., had signed up to use ION. But most of the service's corporate users were smaller businesses, according to Sprint.
Mason Rotelli, an ION user and CIO at cabling distributor Communications Supply Corp. in Carol Stream, Ill., said he was "very disappointed" when Sprint told him it was discontinuing the service. Communications Supply has been using ION for data network connections between its headquarters and 32 regional offices as well as for Internet access and voice telephone services.
"ATM and ION were the right technologies," said Rotelli. Sprint agreed to support his ION setup for another 18 months, completing the term of Communications Supply's contract, he added. After that, Rotelli said, he will look at the alternatives Sprint has to offer before shopping elsewhere.
Michael Speyer, an analyst at The Yankee Group Inc. in Boston, said the ION technology "was mostly there" from a development standpoint. But sales were lower than expected, making it a huge cash drain on the company, he said.
Another analyst, Rob Carlson at Current Analysis Inc. in Sterling, Va., estimated that Sprint has spent between US$4 billion and $5 billion on ION. With a total of about 4,000 customers when consumers are included, that investment amounts to more than $1 million per user, Carlson said.
Sprint isn't completely exiting the fixed wireless business. The company will stop selling its Multichannel Multipoint Distribution Service (MMDS) offering to new customers and freeze the number of markets in which the service is available. But Sprint said it will continue to support existing MMDS users.
The problem with MMDS, the Sprint spokesman said, is that the current line-of-sight technology limits its coverage area to 50 percent or less of the market in most metropolitan areas.
Sprint is working on a second-generation MMDS service that it hopes will mitigate the coverage problems, but the company wouldn't say when that upgrade might be available to customers.
Chandra Welton, Internet sales manager at Larry Roesch Chrysler Jeep in Elmhurst, Ill., said the MMDS service the car dealer installed this summer is working fine.
"At this point, . . . I'm not that concerned [about Sprint's decision]," Welton said.