Sprint's Hesse on webOS, Ericsson, Virgin Mobile and more – page 2

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FierceWireless: You recently said that at some point this year Sprint will launch its first Android-based device. Can you give me any more specifics on that?

Hesse: I can't give you more, other than to verify that you're right--we have said that we intend to release or at least provide an Android device later this year. We've been part of the Open Handset Alliance since the beginning. We've been a big, strong supporter of Android. And we now feel as though the Android devices are mature and robust enough to offer in the marketplace.

FierceWireless: Is there anything about Android functionality or the perception of the platform that led to this decision?

Hesse: Well, it's a combination of the platform and the devices that it would be made available on. The recent press with respect to T-Mobile's new Android device [the myTouch3G], if you look at that, people will say, ‘Boy, what a difference a year makes.' And we agree with that. So it's a combination of the platform and the applications, as well as the maturity of the hardware, if you will, the devices that Android is being offered on, and say now it's ready. We didn't want to launch a new platform with its brand before it was really ready for primetime. We thought a year ago it was premature, and we don't any more.

FierceWireless: How does Sprint plan to capitalize on the momentum and buzz the Pre has generated, and to keep that going once the carrier's exclusivity period on the device runs out?

Hesse: Well, 2010 is a long way away. We'll make those decisions probably later, based upon the market dynamics and what the devices are, and the environment in 2010. That being said, we're very confident in Palm as a company, not only the Pre but in other devices that Palm will be launching over time. WebOS we really think is a very strong operating platform as well. We intend to, of course, stay committed to the Pre, but there will also be new Palm devices that we'll be introducing as well that we're very excited about.

FierceWireless: So you guys are going to launch other webOS-based devices in the future?

Hesse: Yes.

FierceWireless: Sprint entered into a network management agreement with Ericsson. Can you explain the rationale behind that? And also, given Ericsson's recent winning bid for Nortel Networks' wireless assets, how do you think the dynamics of the North American CDMA market will change?

Hesse: Well I think you've raised a very important point. And that is, with the acquisition of Nortel's CDMA business, it just shows how committed Ericsson is to the North American market, its investment in the market. So we see that as a very positive development. Carriers worldwide--the United States has not adopted this--but worldwide hundreds of them outsource the non-strategic, day-to-day transactions of their network. We still maintain full control and ownership of the Sprint network. But we saw this as an opportunity to [work with] a company where this is their core competence, this is what they do....

It was also great for our people in that moving first means that our team of people that would move over to Ericsson would become the initial core of their North American operations. So we thought it was very good for them and their careers, because what they do is a core business of Ericsson. So all around, we thought it was a good strategic move to make, and it allows us to use our investment dollars more effectively.

FierceWireless: Does Sprint think that a possible Department of Justice investigation into certain wireless industry practices is warranted, or that the FCC should look into whether handset exclusivity deals are anticompetitive? Where does Sprint stand on the competitiveness of the industry?

Hesse: I think just about every study that's been done will demonstrate very clearly that the U.S. wireless industry is, if not the most competitive, one of the most competitive in the world. I think a Merrill Lynch study ... said that the U.S. was the most competitive market, if you look at prices, handset choices, what have you. Quite frankly, we don't agree with any characterization of the wireless industry being less than very, very competitive.

That being said, there are two issues. Because you do have a couple of companies that are more than wireless companies. There's vertical integration, if you will. And there are two issues that do need scrutiny. I think one is in the area of special access. The rates that the landline local divisions, the monopoly divisions of AT&T and Verizon, charge to wireless carriers like Sprint for backhaul--what's called special access--we think those rates are way too high and there is a lack of competition. And the other issue ... is the issue of in-market roaming. ... We think that the rules there do need to be changed. For example, a lot of those markets were subsidized when they were built by Universal Service Funds when they were part of Alltel. So not making that roaming available to wireless carriers at a reasonable charge is not right.

So I think there are small issues that do need some regulatory scrutiny and oversight, and that I don't think are working appropriately. I would call those tweaks to the overall industry structure. But the overall industry structure is really very competitive.

FierceWireless: Does Sprint plan to launch its own mobile WiMAX markets, or will it continue to follow Clearwire's buildout and only offer service in Clearwire markets?

Hesse: You would expect to see, going forward, as Clearwire launches a market, Sprint will launch the market. We have, if you will, lagged them. They have launched some markets that we have not launched yet, because we will launch with dual-mode capability. So Clearwire's going out there now launching when single-mode 4G is available, [and] when the systems and capabilities are ready for dual-mode, we will launch those markets. So expect to see, around the end of the summer, Sprint launching in the Clearwire markets that have already been launched with Sprint 4G, which will be dual-mode. And then we would launch the rest of the markets that Clearwire has announced at roughly the same time as Clearwire, for the rest of this year and going forward.

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