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Changes to Take Place Months, Years After Possible Sprint, Nextel Merger

Posted on: Thursday, 23 December 2004, 00:00 CST

Dec. 23--If Sprint Corp. and Nextel Communications Inc. wind up merging late next year, don't expect the new Sprint Nextel to come roaring out of the gates with the kinds of massive service upgrades rolled out by the new Cingular Wireless LLC.

The very day that Cingular closed its takeover of AT&T Wireless Services Inc. to become the biggest US cellphone company, on Oct. 26, it activated a new roaming deal between the two predecessor networks that meant an instant improvement in calling coverage for many of its 46 million customers.

Twenty days later, Cingular also expanded unlimited mobile-to-mobile calling plans to double the number of cellphone owners its customers can call without deducting from their monthly minutes.

But in the case of Sprint Nextel, it will be months if not years before existing subscribers see any dramatic changes. Unlike Cingular and AT&T Wireless, which share common network operating systems, Sprint and Nextel operate totally different systems that make it impossible for a subscriber to one carrier to roam onto the network of the other.

"From a customer perspective, you can't expect to see much that is different or much that is better anytime soon in this combination," said John Hanson, a telecommunications specialist with Mercer Management Consulting in Boston.

Hanson said that after the Cingular-AT&T deal closed and left two dominant US super-carriers, "The dynamic here was [that] Sprint thought: We've got to do something to keep pace, so let's make a virtue out of necessity and combine with Nextel. Then we'll figure out what it means for our customers afterwards."

One small upgrade that would happen "very soon after the close," according to Nextel spokesman Russ Wilkerson, is the two carriers would interconnect their so-called push-to-talk services. That would mean Nextel DirectConnect users and Sprint ReadyLink users could launch walkie-talkie chats with each other.

That, however, is likely to be only a marginal improvement for Nextel customers. More than 94 percent of Nextel's 15.3 million subscribers regularly use DirectConnect for walkie-talkie chats. Sprint has never revealed how many ReadyLink phones it has sold, but most analysts doubt they are used by more than 1 or 2 percent of its 20.1 million Sprint PCS customers.

ReadyLink chats take considerably longer to set up than DirectConnect, industry test specialists regularly find, so users who put a high priority on push-to-talk have probably already chosen Nextel.

Sprint Nextel does not expect to begin offering a phone that works on both networks until 2006 at the earliest, and it is "projected" it won't be until 2008 that Nextel's customers move onto the Sprint network, Wilkerson said. That assumes the company has been able to develop a version of DirectConnect as good as what Nextel offers today that can work on Sprint's network.

"At this point, it's too early to outline specific timelines," Sprint spokesman Mark J. Elliott said.

The biggest hurdle, though, is conflicting technologies.

Cingular and AT&T both operate on the Global System for Mobile network standard.

Sprint uses one called Code Division Multiple Access -- as does Verizon Wireless.

But Nextel uses a proprietary Motorola Inc. standard called iDEN, for integrated digital enhanced network.

The differences are roughly analogous to the differences between the Windows, Linux, and Macintosh computer operating systems -- or, in terms of the digital language in which data bits fly through the airwaves, French, English, and Urdu.

Jan Dawson, a research director with the Boston office of the global information-technology consultancy Ovum, said moving Nextel's customers to Sprint's CDMA standard will not be easy. "The key is in the execution," Dawson said. "The integration process will be disruptive for employees, customers, and partners, which will cause problems of its own."

Nextel customers, however, could get an offer for high-speed wireless service sooner than they otherwise would. For years, Nextel has been studying what kind of system to use to match services like Cingular's EDGE and Verizon Wireless's BroadbandAccess, which offer wireless Internet connections 10 times as fast as with conventional dial-up modems.

Its move to such a system turns heavily on Nextel's executing a complex $3 billion deal with the federal government to reorder its licenses for airwave channels and deploy new equipment, which could take years.

Sprint, though, is currently building a faster data network and expects to begin activating service next year.

Soon after Sprint closes a merger with Nextel, Wilkerson said, the combined company would market to Nextel subscribers devices to offer wireless data connections for laptop computers over the Sprint network.

Aside from the wireless data and push-to-talk services, analysts say, Sprint Nextel mainly faces a long hard slog.

"There's a lot of unknowns in making this thing work," said Bill Lesieur, a top executive with Technology Business Research in Hampton, N.H. "They were kind of surprisingly honest that this is going to be a three-year process to merge. It's unprecedented what they're going to do."

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Source: The Boston Globe

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