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Technology Stocks : Leap Wireless International (LWIN)
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To: pcstel who wrote (1536)2/26/2002 12:56:10 PM
From: Pierre  Read Replies (2) of 2737
 
pcstel:

Thanks for the analysis. I suspect it is those VF contracts that have driven down the price of LWIN.

A couple of things I picked up at last night's Sprint sponsored wireless conference:

There seems to be a perception that LWIN's business model includes, as major component, the replacing of land line with a Cricket phone in its target market. Hence the FCC decision in November looms large imho. The fact that Cricket has managed only a 6% land line replacement rate (that's the number I heard bandied about, no idea if it is accurate) among its customers is perceived as "under-performing." I would tend to agree, and suspect number portability or the lack of same is the major impediment.

Another interesting observation I thought was the Sprint people talking about how their system is very "under used" after 6:00 p.m. and on weekends - hence all the bundled plans giving those minutes away. Too bad LWIN can't tap that excess capacity since I suspect that is a "high usage" period for their targeted customer. Certainly cheaper than building more towers. Sprint would also probably welcome the additional day time capacity LWIN has to offer. seems to me some synergy there, but doubt it is technically feasible.

You would have been amused at the presentation. Seybold and a guy from Forrester research yammering on and on about WiFi - both agreeing there is no business case for a provider of "data only" service. All the presenters trying to figure out a way for wireless carriers to extract revenue from data. Only the QCOM people looked happy - new phones and new chips. The carriers seemed less sanguine about how to get the new wiz bang devices to translate into sufficient revenue to justify the cost. Seybold opined that Verizon's data pricing plan was "brain dead" and almost designed to discourage data use. I think you suggested something similar some time ago. The PCS delayed roll out was confirmed to be due to their devising a "packet charge" pricing structure. Some serious questions about consumer acceptance of that approach as well.

Interesting chess board out there. I'm beginning to think Sprint may end up on top vis a vis Verizon, not so much because of wireless 3G to the average consumer, but because the rest of the company (FON) gives them some competitive advantage in areas Verizon can't compete. Guessing here, but I think the 3G hype may be dying down as the "holy grail" of wireless, and we're going to see the landscape change in terms of devising revenue models for the new technology. Wish I had a better feel for who will remain standing when it's all said and done.

Pierre
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