Sprint and Nextel have a game plan for the future, and it's not what you might think. The playbook goes like this: Merge the two companies to create a wireless giant, then transform the combined company - yet again - into a broadband Bigfoot that can compete head-on with Verizon and SBC Communications.
No kidding.
"It's all about the third screen," says Sprint CEO Gary Forsee, referring to the pint-sized video screens on wireless phones that are fast becoming ubiquitous.
The first two screens, of course, would be the TV and the PC. Forsee thinks the wireless screen, which is rapidly evolving into a mobile media center for millions of users, is the next great broadband opportunity.
Tim Donahue, Nextel's CEO, nods his head at that.
"We will be able to build a new high-capacity, high-quality broadband network that can carry any content that any consumer wants to have," he says, adding: "(Wireless) broadband is coming, and it's coming fast."
Forsee and Donahue talked about the future of the combined company in an interview with USA TODAY, their first joint interview since the Sprint-Nextel merger was announced in December. The $70 billion merger, which received regulators' blessing last week, is expected to close Friday.
Transforming combination
Looking back, the two CEOs say their decision to merge was driven not so much by the need to get more wireless customers - Sprint was already the No. 3 wireless carrier, and Nextel was No. 5. Rather, they say, the merger was aimed at transforming the two carriers into another type of animal entirely.
That animal, so it seems, will be part Hollywood, part wireless carrier, part broadband powerhouse. The driver of that change: the oodles of 2.5-gigahertz spectrum that Sprint and Nextel jointly own.
The two carriers picked up the spectrum years ago for a song. At the time it was considered the wireless equivalent of industrial sludge - basically useless.
Since then, the 2.5-GHz spectrum has become a hot commodity. Why? Two words: wireless broadband. The spectrum will be used, over time, to provide a high-octane version of Wi-Fi and WiMax, industry slang for wireless broadband.
Wi-Fi "hot spots" provide the Internet connections common in coffee shops, bookstores and airport terminals. WiMax, which is used to cover bigger geographic areas, is the next step in the evolution.
Over time, proponents think fourth-generation, or 4G, applications of WiMax can be engineered to provide coast-to-coast wireless broadband. What does that mean for consumers? Freedom. With 4G, a wireless customer might be able to take a car or train ride coast to coast - and surf the Web uninterrupted.
Sprint and Nextel own 2.5-GHz coverage for 80% of the USA, including such major markets as New York, Chicago and Los Angeles. No other carrier comes close, says Berge Ayvazian, Yankee Group's chief research officer. That makes Sprint Nextel, potentially, a major force to be reckoned with in the future, he says.
According to Ayvazian, 4G services are even more potent than the cutting-edge 3G, or third-generation, services that Cingular, Sprint and Verizon are deploying. In addition to being a lot more cost efficient, he says, 4G is "spectrally efficient," so carriers can do more with less.
Another plus: 4G can be mobile - or not. "You can use it in your house if you want to," Ayvazian says.
The upshot: "They (Sprint Nextel) have the opportunity to leapfrog today's technology," he says.
What's ahead
Donahue figures Sprint Nextel can start deploying 4G services as early as 2008, putting it on track to compete head-on with SBC and Verizon.
Trying to get market share, Cingular and Verizon have lately been cutting prices. The pricing strategy allowed the carriers, which rank No. 1 and No. 2 in terms of size, respectively, to add a record number of customers in the last quarter. But growth came at the expense of "revenue-per-subscriber," a measure of financial health that is closely watched by Wall Street.
Forsee and Donahue's strategy is to grow the new company by offering a "differentiated" product - the 2.5-GHz spectrum is key - and cool new services. The latter, they say, will eventually include everything from downloads of Hollywood movies to sporting events, breaking news and live video off the Web. All transmitted to mobile devices. And that all-important "third screen."
By going that route, Donahue thinks Sprint Nextel can attract "a customer who will pay you more and stay with you longer."
The new company will be marketed under the Sprint brand name. But Nextel, a name known to millions of business users, won't go away - it will simply be scooped up under the Sprint moniker. The actual tagline: "Sprint, together with Nextel."
The arrangement is a testament to the strength of the Sprint name; it is also a nod to the good working relationship between Forsee and Donahue, who spent a year working shoulder-to-shoulder to close the deal.
The two CEOs, who showed up in almost-matching ensembles - blue shirts and tie-less - are clearly at ease with each other. During the interview, they listened patiently whenever the other was speaking, taking care to not interrupt.
But they turn uncomfortable when the subject turns to their unusual management arrangement. When the deal closes, Forsee, 55, will become Sprint Nextel's CEO and president; Donahue, 56, will become executive chairman.
So who's in charge?
The question causes the two CEOs to clam up. A moment later, Donahue takes the bait: "I see my role as giving as much support as possible to Gary." Forsee returns the favor, noting that the two men have a lot of "mutual trust and respect."
But the question remains: Who's in charge, really?
The short answer: Forsee, who will be responsible for day-to-day management of the business. But he is quick to note that he'll depend on Donahue, who famously built Nextel from scratch, for regular guidance.
Donahue, who has a two-year contract, gamely offers that the two men have not had any major disagreements over the past year. "There's never been an instance where Gary has said, 'You're full of prunes,' " Donahue says. "I think we think a lot alike."
http://news.yahoo.com/s/usatoday/20050810/tc_usatoday/newsprintnextelwillfocuson3rdscreen;_ylt=A0SOwjvg_vlC8OEA.BEjtBAF;_ylu=X3oDMTBiMW04NW9mBHNlYwMlJVRPUCUl
No kidding.
"It's all about the third screen," says Sprint CEO Gary Forsee, referring to the pint-sized video screens on wireless phones that are fast becoming ubiquitous.
The first two screens, of course, would be the TV and the PC. Forsee thinks the wireless screen, which is rapidly evolving into a mobile media center for millions of users, is the next great broadband opportunity.
Tim Donahue, Nextel's CEO, nods his head at that.
"We will be able to build a new high-capacity, high-quality broadband network that can carry any content that any consumer wants to have," he says, adding: "(Wireless) broadband is coming, and it's coming fast."
Forsee and Donahue talked about the future of the combined company in an interview with USA TODAY, their first joint interview since the Sprint-Nextel merger was announced in December. The $70 billion merger, which received regulators' blessing last week, is expected to close Friday.
Transforming combination
Looking back, the two CEOs say their decision to merge was driven not so much by the need to get more wireless customers - Sprint was already the No. 3 wireless carrier, and Nextel was No. 5. Rather, they say, the merger was aimed at transforming the two carriers into another type of animal entirely.
That animal, so it seems, will be part Hollywood, part wireless carrier, part broadband powerhouse. The driver of that change: the oodles of 2.5-gigahertz spectrum that Sprint and Nextel jointly own.
The two carriers picked up the spectrum years ago for a song. At the time it was considered the wireless equivalent of industrial sludge - basically useless.
Since then, the 2.5-GHz spectrum has become a hot commodity. Why? Two words: wireless broadband. The spectrum will be used, over time, to provide a high-octane version of Wi-Fi and WiMax, industry slang for wireless broadband.
Wi-Fi "hot spots" provide the Internet connections common in coffee shops, bookstores and airport terminals. WiMax, which is used to cover bigger geographic areas, is the next step in the evolution.
Over time, proponents think fourth-generation, or 4G, applications of WiMax can be engineered to provide coast-to-coast wireless broadband. What does that mean for consumers? Freedom. With 4G, a wireless customer might be able to take a car or train ride coast to coast - and surf the Web uninterrupted.
Sprint and Nextel own 2.5-GHz coverage for 80% of the USA, including such major markets as New York, Chicago and Los Angeles. No other carrier comes close, says Berge Ayvazian, Yankee Group's chief research officer. That makes Sprint Nextel, potentially, a major force to be reckoned with in the future, he says.
According to Ayvazian, 4G services are even more potent than the cutting-edge 3G, or third-generation, services that Cingular, Sprint and Verizon are deploying. In addition to being a lot more cost efficient, he says, 4G is "spectrally efficient," so carriers can do more with less.
Another plus: 4G can be mobile - or not. "You can use it in your house if you want to," Ayvazian says.
The upshot: "They (Sprint Nextel) have the opportunity to leapfrog today's technology," he says.
What's ahead
Donahue figures Sprint Nextel can start deploying 4G services as early as 2008, putting it on track to compete head-on with SBC and Verizon.
Trying to get market share, Cingular and Verizon have lately been cutting prices. The pricing strategy allowed the carriers, which rank No. 1 and No. 2 in terms of size, respectively, to add a record number of customers in the last quarter. But growth came at the expense of "revenue-per-subscriber," a measure of financial health that is closely watched by Wall Street.
Forsee and Donahue's strategy is to grow the new company by offering a "differentiated" product - the 2.5-GHz spectrum is key - and cool new services. The latter, they say, will eventually include everything from downloads of Hollywood movies to sporting events, breaking news and live video off the Web. All transmitted to mobile devices. And that all-important "third screen."
By going that route, Donahue thinks Sprint Nextel can attract "a customer who will pay you more and stay with you longer."
The new company will be marketed under the Sprint brand name. But Nextel, a name known to millions of business users, won't go away - it will simply be scooped up under the Sprint moniker. The actual tagline: "Sprint, together with Nextel."
The arrangement is a testament to the strength of the Sprint name; it is also a nod to the good working relationship between Forsee and Donahue, who spent a year working shoulder-to-shoulder to close the deal.
The two CEOs, who showed up in almost-matching ensembles - blue shirts and tie-less - are clearly at ease with each other. During the interview, they listened patiently whenever the other was speaking, taking care to not interrupt.
But they turn uncomfortable when the subject turns to their unusual management arrangement. When the deal closes, Forsee, 55, will become Sprint Nextel's CEO and president; Donahue, 56, will become executive chairman.
So who's in charge?
The question causes the two CEOs to clam up. A moment later, Donahue takes the bait: "I see my role as giving as much support as possible to Gary." Forsee returns the favor, noting that the two men have a lot of "mutual trust and respect."
But the question remains: Who's in charge, really?
The short answer: Forsee, who will be responsible for day-to-day management of the business. But he is quick to note that he'll depend on Donahue, who famously built Nextel from scratch, for regular guidance.
Donahue, who has a two-year contract, gamely offers that the two men have not had any major disagreements over the past year. "There's never been an instance where Gary has said, 'You're full of prunes,' " Donahue says. "I think we think a lot alike."
http://news.yahoo.com/s/usatoday/20050810/tc_usatoday/newsprintnextelwillfocuson3rdscreen;_ylt=A0SOwjvg_vlC8OEA.BEjtBAF;_ylu=X3oDMTBiMW04NW9mBHNlYwMlJVRPUCUl
