We have seen some interesting announcements in the US wireless carrier world today.
1. First Verizon announces launch of 1X services in 20% of its network (key strategic areas); we've seen several announcements and
discussion on this board. Interesting point: VZ has network, but no 1X handsets; only one Kyocera model is adverstised and anecdotal
evidence suggests it may not be in the stores (http://www.siliconinvestor.com/readmsg.aspx?msgid=16972943)
2. Sprint PCS has several 1X handset models available in its stores (has had them for a couple of months); I know because I bought one
over the weekend (proudly displaying "Qualcomm 3G CDMA"... enough to bring tears to Morgie's eyes). But the network is not yet
launched (except in some non-adverstised test markets), and nationwide launch is slated for summer (they would still scoop VZ by saying
they're the fist nationwide 1X network).
3. AWE and Cingular have announced joint build out and sharing of the GSM/GPRS infrastructure along several corridors in the
West and Midwest:
quote.fool.com{65FD1405-2EB7-49E2-8A61-D6C22D3E1216}&currticker=awe&symbols=awe&nx=&bx=
..joint venture that will allow both carriers to more quickly and cost-effectively expand their buildout of GSM/GPRS network
coverage along 3,000 miles of interstate highways in predominantly Mid-western and Western states. This JV will be the first to
provide GSM/GPRS wireless technology to customers along major interstate routes in Arizona, Colorado, Kansas, Minnesota,
New Mexico, Nebraska, Oklahoma, Texas and Utah.
The new network is expected to be operational in the first quarter 2003.
By sharing the capital cost of the network build-out, Cingular, a joint venture of SBC Communications Inc. (NYSE:SBC) and
BellSouth (NYSE:BLS), and AT&T Wireless will bring the benefits of advanced network services (GSM/GPRS) to millions of
their customers many months sooner than either company could have on its own.
One could add:..and still many many months later than the CDMA competition (and with much less functionality).
The joint venture will be managed equally by AT&T Wireless and Cingular. In addition to cash capital contributions, each
company will also contribute spectrum that will be held and managed by the JV
Interesting deal! Both AWE and Cingular have lagged the CDMA carriers in terms of new subscriber acquisition. Both are spectrum
constrained, and would have likely had problems with capacity for both GPRS and GSM around busy areas (e.g. in the metro areas and
suburbs). Now, they're essentially doubling up the demand (load) and halving the capacity-- that's a factor of 4 increase in the load to
capacity ratio, i.e. in congestion (more dropped calls and network busy signals).
But it also seems an indication of things to come, albeit somewhat earlier than expected. Industry consolidation has been predicted for
some time now. This is a precursor to a full merger and/or takeover of Cingular. There has also been speculation that the Cingular joint
venture between SBC and Bell South will now come apart (courtesy of Ben Garrett at SI
siliconinvestor.com. Bell South has long been known to prefer CDMA,
which it has chosed for its South American operations.
The other ineteresting impact might be on the GSM infrastructure vendors, particularly Nokia-- they were in line for the lion's share of
the two network conversions to GSM.
4. This would leave VZ and Sprint as plausible partners for joint venturing. They are both CDMA-strong, and as I noted, one has the 1X
network while the other seems to have the handsets (but that's only temporary). In fact, VZ is rumored to be soon offering an
All-America plan that includes free-roaming access to the Sprint PCS network for its customers
(http://www.siliconinvestor.com/readmsg.aspx?msgid=16969711). No confirmation on VZ's web site though. This means that VZ
subscribers who are in a Sprint PCS area can have service without paying roaming fees. I would assume that a reciprocal arrangement
would be made for Sprint PCS customers. This might suggest that an early launch by Sprint of 1X service on part of its network may be
in the cards, especially if combined with the portion that VZ has already launched.
5. Could VZ and Sprint merge? There is much less incentive for them to do so, given that they are close to completing their own
individual 3G upgrades, and control their own destiny. However, reciprocal access agreements on their compatible digital CDMA
networks might improve service quality and coverage for customers of both carriers.
6. There seems to be much more to come...
I think these changes are ample recognition that CDMA is giving its operators considerable advantages in capacity, cost to upgrade, and
time to market.
TMF Thread.......... |
