Questions for Charles Levine, President, Sprint PCS
By Ryan Naraine
When Sprint PCS (NYSE:PCS) president Charles Levine surveys the wireless telecommunications scene, he likes what he sees.
In his view, it's a battleground filled with very tough competitors. But Levine believes Sprint PCS is on secure ground with the wireless provider's plans in place for a nationwide rollout of a third-generation (3G) wireless network next year.
Still, there are potholes on the landscape, such as the question of whether consumers will adopt the next-generation Code Division Multiple Access (CDMA) 1XRTT technology, which allows high-speed connectivity, data delivery and Web surfing via cell phones.
The CDMA-1XRTT technology allows Web surfing at speeds as high as 144Kbps and full 3G service promises to support speeds of 384Kbps and higher. In the interim, Levin believes consumers will be attracted to mobile gaming and messaging on cell phones. On the business side, he said the ability to do wireless file transfers and voice/data delivery would spur 3G use in corporate environments.
During a recent swing through New York, the marketing veteran rapped with the media about his company's 3G plans and hot they stack up with the competition. Excerpts follow:
Q: What's the state of play in the cell phone industry. Where is it headed?
Five year ago, wireless telephony was basically a bunch of rich guys making calls that all started out the same way: "guess where I'm calling from." And the answer usually was: "I can tell you're calling from your cell phone because it sounds so crappy." Today, the cell phone industry has reached the stage where people are using mobile phones without thinking twice about whether it will cost too much. Nobody worries anymore. It used to be you never shared your phone number because you never wanted anyone to control your costs. That's all changed.
This is a now a multi-billion dollar industry and we have done really well. We have been able to grow this company in less than five years to more than $10 billion in revenues on an operating basis. It took Microsoft, Cisco and Dell between 12-15 years to get to $10 billion.
Q: Sprint PCS is getting ready to open up its 3G network nationwide by the middle of next year. How will this change things?
(3G technology) will increase the data delivery speed and that's the attraction right off the bat. It will be 50-70 kbps faster than dial-up connections. Today, we're at 14.4 line speeds and, with 3G, we'll get up to 3-5 Mbps. We're building an increasingly efficient network, both for voice and data. In fact, 3G is going to allow us to double our capacity. If we don't get a single customer, we'd still invest in 3G technology -- it's the lowest cost way to double our capacity and with the number of subscribers we have added, we need to double our capacity.
The network is packet-based so it's always-on. We are going to introduce enhanced applications and new technologies. 3G will enable business customers to do more, to do it faster and to do it at lower costs. On the consumer side, it will allow consumers to stay in touch and have more fun. So, even in that initial phase, as we go to higher speeds, consumers will enjoy more and more capabilities, like instant messaging. You'll be able to open e-mail attachments easily.
It will allow interactive games, downloadable ringers, screensavers, device personalization, still pictures and video imaging and full Internet browsing. It would also be able to handle on-demand conferencing, enhanced location-based services and eventually, we could go into push-to-talk services if we want to add it.
We're still in the process of upgrading the networks for emergency 911 services across the country and that will be in place by the third quarter of 2002. We've got an incredibly efficient use of spectrum. We've paid about 50 cents per megahertz per pop. We've spent less than $3.5 billion on spectrum across the country. In the recent NextWave auction, one company who shall remain nameless, bid more than $4 billion for 20 megahertz of spectrum in New York alone. So, they paid more for 20 megahertz of spectrum in New York than we paid for the entire country. And that, by the way, includes 30 megahertz in New York. We don't need any more spectrum for the rest of the decade because 3G is so efficient.
Q: Once your 3G network is up and running, which markets will get it first?
Everyone. We will open it up nationally, simultaneously. It is not okay for a single business customer to be able to use it in New York but not have it available when they travel. What they really want is to use it everywhere, from day one. A lot of companies, AT&T for example, has talked about introducing it market-by-market, but that won't be perfect for customers who want to use it around the country.
Q: If I own a phone today, when you open up this 3G network, do I have to get a new phone? And what's the pricing structure going to be like on 3G compatible phones.
Some of our competitors are saying that at some point, you'll have to switch phones. But if you already have a 2G phone, it doesn't matter. If you jump on the 3G network, you will get the same functionality with the old phone.
On the pricing end, it will be a little bit higher, depending on what you want in your phone. Our average price on the handsets will probably be significantly higher but not because it's 3G, but because we think customers are going to be demanding enhancements like color screens and a lot more capabilities. I can say that we're not the highest priced guys out there and we're not going to be the lowest priced guys either. I'd say we're the middle-of-the-road guys in terms of pricing and we will adjust according to the market.
Q: On the consumer end, what is going to drive the public to 3G services?
The biggest applications right now for consumers are messaging and games. AOL instant messaging is something that we offer on all our phones today. Consumers are already playing games on our network. With 3G games on a handset, you can get full-color display; you can download new games whenever you feel like and you can either play alone, against the computer or against other people so there is much more flexibility for gaming fans. It will also appeal particularly to younger users. It's also important to not that we're a joint venture with Virgin Mobile and (in that partnership), we believe music is going to drive a lot of usage.
Q: Describe the competition in the mobile communications space...
There are a bunch of tough guys out there. This is not an easy industry but I'm proud to say we have led the industry in new customers for 13 consecutive quarters. Verizon (NYSE:VZ) is aggressive and tough -- they're a very good competitor and we have to face them every day in every single Radio Shack store. Another tough one is VoiceStream. They are the low-price guy out there. They (VoiceStream) are giving plans that are just extraordinary in terms of the number of minutes they are giving. Their pricing is pretty aggressive.
On the business market, Nextel has been very tough because they have a feature that, up until now, no one else have had -- the Push-to-Talk service. Nextel is the only competitor offering that service for walkie-talkie type applications. In some markets, Cingular is tough. In every market, there typically are six really strong competitors.
December 12, 2001
atnewyork.com |
