Will QChat Save Sprint?

Will QChat Save Sprint?  

It's common knowledge that Sprint has struggled to overcome many technical and operational challenges associated with its $35 billion merger with Nextel. Having two wireless networks using disparate technologies--Nextel with iDEN and Sprint with CDMA--has proven to be a big headache. While Sprint has always said it will phase out Nextel's iDEN network and migrate the firm's Direct Connect users to its CDMA network, the company is finally gearing up for that transition.

At Sprint Technology Summit in August [1], company executives talked about how Sprint was testing QChat, the technology developed by Qualcomm, which will offer push-to-talk services over the firm's CDMA EVDO Rev. A network. Now reports are circulating that the company is testing QChat handsets [2] from Motorola, Samsung, LG and Sanyo and that it is on track for an early 2008 QChat launch.

But will that be fast enough to stop the steady flow of iDEN customers who are ditching their phones and churning to other operators?  Earlier this month, Sprint announced that it was expecting a net loss of 337,000 customers in the third quarter. Many of those customers are believed to be former Nextel subscribers unhappy with the existing iDEN network. Sprint has said it will keep the iDEN network operational through 2012, however it is in the company's best interest to migrate iDEN customers to its CDMA Rev A network as quickly as possible.

The company has had some success with its Powersource phones [3]. Those are the phones that offer dual-mode iDEN/CDMA capability. At the end of the second quarter, the operator had 850,000 users with Powersource phones.

But Powersource handsets are just a stopgap measure. The real goal is to get consumers to upgrade to QChat and be on the company's Rev. A network. Sprint believes that the QChat over Rev A will provide superior PTT service and it will also incorporate all the other benefits of a Rev. A network such as broadband data access. Plus, the carrier will be able to offer customers a variety of sleek handsets from multiple vendors. The handsets will be cost-effective because they use CDMA, not the proprietary iDEN technology.

I expect the transition from iDEN to QChat will have some hiccups. All the iDEN customers will have to get new handsets. While this may seem like an easy sell, remember that most of iDEN's core customers are big companies with hundreds of employees all outfitted with Nextel phones. Upgrading entire fleets with new handsets is a costly proposition for most companies. Sprint will have to offer some compelling incentives to get customers to upgrade all those phones.

The earlier Sprint seeds the market with QChat phones, the better. The firm has said it plans to have QChat technology incorporated into all its CDMA phones by 2009 but I'm not convinced that will be fast enough to stop iDEN customers from churning.

We will be discussing the benefits of push-to-talk, mobile VOIP and other voice technologies and applications that operators can use to enhance their revenues at the FierceMarkets Wireless Voice 2007 conference in San Francisco Nov. 13-14.  I put together the agenda and I think you'll find the content compelling. We've got some great speakers from companies such as SpinVox, Qualcomm, Kodiak Networks and more.  Check out the agenda here [4]. -Sue [5]