Sprint: Wireless remains safe bet

'Staple' spared in credit crisis

By Kara Rowland (Contact) | Thursday, October 9, 2008

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BALTIMORE | Not only does Sprint Nextel Corp.Chief Executive Officer Dan Hesse think wireless carriers are "more insulated" from an economic downturn, he doesn't expect the credit crisis to hinder the company's new high-speed mobile data network, which debuted here recently.

"Wireless has become such a staple," Mr. Hesse said as he introduced Sprint's new WiMax network Wednesday, citing a survey that showed most people would sacrifice their televisions and computers before giving up their cell phones.

So-called "wireline" companies are more likely to suffer as cost-cutting households get rid of their home phone lines, he said. Some cell phone users may opt for cell phones with fewer "bells and whistles" or cheaper monthly plans, he added.

Sprint, the nation's third-largest carrier by subscribers, last month started selling access to its new WiMax network, which now covers 75 percent of Baltimore. Unlike traditional mobile broadband models, WiMax service is purchased without a contract; consumers pay either $10 for a day pass, $25 a month for a home modem or $30 a month for a laptop card.

Like Mr. Hesse, Barry West, president of Sprint's WiMax business unit - known as Xohm - isn't worried by the prospect of rolling out the network during a credit crisis.

"It's just an amazing deal. When the economy's tight, people [think], 'Well, I really can't give up mobility,'" he said.

WiMax offers more bandwidth at faster speeds and greater distances than existing wireless Internet services, allowing customers to run more applications. It's the first fourth-generation wireless technology to be launched in the United States. Sprint competitors Verizon Wireless and AT&T Inc. chose a different technology standard that won't be available for a few years.

A lot is riding on the venture for Sprint, which had developed a reputation for poor customer service and was bleeding subscribers when Mr. Hesse took over in December.

The company is currently seeking approval to merge Xohm with Clearwire Corp. The deal, announced in May, includes $3.2 billion in investments from Intel Corp., Comcast Corp., Time Warner Cable Inc., Google Inc. and Bright House Networks.

Mr. Hesse said the current financial crisis hasn't hindered the venture, which is "all systems go." The partners will need to raise another $2 billion at some point to fund the network's nationwide expansion, which will cost a total of about $5 billion.

WiMax service should be available to as many as 140 million people nationwide by 2010, Mr. West said.

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