Why aren't other carriers exploiting iDEN's troubles?
It's no secret that Sprint Nextel's iDEN network is having capacity problems and the company's lucrative Direct Connect subscribers are bailing on the service. We've seen this trend over the past several quarters. Earlier this week it was particularly evident when Sprint reported that its first-quarter 2007 iDEN subscribers totaled 16.5 million, down from 17.6 million in fourth-quarter 2006. Of course, the company did sell 400,000 PowerSource handsets--these are dual-CDMA/iDEN phones that most likely were purchased by former iDEN subscribers.
Of course, what was always so compelling about Direct Connect is that there was a big pool of users across certain vertical markets. One of Nextel's strengths was that it drilled down into specific enterprise verticals--construction, public safety and the government--and built a loyal following. This is now hurting the company because when people churn off the iDEN network, they tend to churn in big groups. "The differentiator here is that PTT is a cohort system," says Roger Entner, senior vice president, communications sector with IAG Research. "The more people there are on the iDEN network, the better. The problem is that the groups are leaving together."
What I don't understand is why other operators aren't exploiting this opportunity. We've seen AT&T tout its push-to-talk service and it's even selling the Blackberry Pearl PTT device, which may appeal to some enterprise users. However, the carrier seems to be primarily pushing its push-to-talk to the consumer market through its Family Plans.
I haven't heard of any operators targeting the specific vertical markets like Nextel did. Of course, that takes a lot of resources and time, but in the end the results could be significant.
Technology Business Research analyst John Byrne thinks that we may see other operators targeting these verticals, particularly AT&T once it becomes more fully integrated with the wireline business. He also believes that Verizon Wireless may soon become more proactive in bundling its PTT service with its enterprise business.
But Verizon and AT&T need to make this a priority or they will miss out on the opportunity. In the meantime, Entner says that Sprint should push forward with its QChat service--that's the PTT offering over the company's 1xEV-DO Rev. A network that it hopes to migrate its iDEN customers too once its operational. On this week's earnings call Sprint executives said that QChat devices will be available for demonstration and testing in late second quarter. So it will likely be late 2007 and early 2008 before a full lineup of QChat devices are available commercially. That means that operators with competitive PTT services have about six months to push their PTT offerings to enterprise verticals. It's time to crack the whip. -Sue
P.S. We just added Scott Richardson, CSO of Clearwire to our lineup of keynote speakers at our WiMAX Strategies conference in Chicago June 21. Richardson will join our stellar lineup of speakers from across the WiMAX ecosystem that includes Barry West, CTO and president of 4G Mobile Broadband at Sprint Nextel. Check out the agenda here: http://www.wimaxstrategies2007.com