NEW YORK--The ink is barely dry on the check written to build Sprint Nextel's third-generation mobile network, and the company is already talking about its fourth-generation network.
During a keynote speech at Yankee Group Research's Wireless Leadership Summit here on Tuesday, Sprint Nextel CEO Gary Forsee said the company, which officially closed the books on its $6.5 billion merger with Nextel on Monday, is already looking toward the next generation of wireless technology to deliver new services to customers.
Forsee didn't specify which technology will be used or even which services the company will offer over a fourth-generation, or 4G, network. But he emphasized that 4G is on its way and that it will have an enormous impact on Sprint Nextel's business model.
"4G will give us a 10-fold cost-performance advantage," he said. "When you get 10 times the cost improvement, that's a pretty big deal."
Sprint has spent billions of dollars building its 3G network, which is based on a technology called Evolution-Data Optimized, or EV-DO, technology. The company started offering the service only a year ago, and has spent the latter half of 2005 and the first half of 2006 expanding the network.
With average download speeds of 400Kbps (kilobits per second) to 700Kbps, the network offers enough bandwidth to enable customers to surf and download data from the Internet anywhere they can get cell phone reception. Right now, the service is used mostly on laptops. But some handsets are also supported, providing consumers with mobile music, games and television.
But EV-DO is just the beginning for Sprint. The company is also planning to use its large holding in the 2.5GHz frequency band to provide new 4G wireless services. Sprint Nextel is still testing several technologies, but a front-runner in the race is WiMax, which supports peak data download speeds of about 20Mbps (megabits per second), with average user data rates between 1Mbps and 4Mbps.
Additional spectrum and the development of new 4G technologies will become important as carriers add more bandwidth-intensive applications such as mobile TV.
All three of the big U.S. cell phone carriers--Cingular Wireless, Sprint Nextel and Verizon Wireless--already offer mobile video today, but only about 1 percent to 2 percent of the cell phone market is using the service. Linda Barabee, senior wireless analyst for Yankee Group, said this is a huge opportunity for carriers.
But mobile operators are nervous about using their 3G networks, which were not built for broadcasting television.
"Voice will continue to be a killer application for the mobile operators for a long time," Barabee said. "So they need to be careful about what they put on that network."
But Sprint isn't the only mobile carrier investing in new network technologies to handle broadcast TV on mobile phones. Verizon Wireless has already agreed to work with Qualcomm, which is developing a network especially for mobile TV using a technology it calls MediaFlo.
Forsee said he sees his company's spectrum assets as a competitive advantage.
"4G is one of reasons we got together with Nextel," he said. "We have spectrum holdings in 83 top markets. It's not that others won't be able to get there too, but we have spectrum today."
Analysts agree Sprint Nextel is in a good position, but they say the company still needs to execute on a business model.
"When you have spectrum assets in your back pocket, that's a differentiator that gives a carrier options, especially when it comes to mobile TV," Barabee said. "But what is also needed is a business model that allows them to leverage those assets to deliver commercial services."