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Digital Domain: Republic Wireless’s Plan Melds Wi-Fi and Network Calling

January 26, 2013 by Leave a Comment

When I first saw this offer from Republic Wireless, I rubbed my eyes and looked for an asterisk leading to fine print that detailed a huge catch. But Republic, a division of a telecom company called Bandwidth.com, delivers exactly what it advertises. It can do so because the handset technology is a curious hybrid: it uses Wi-Fi when the customer is in a Wi-Fi area and Sprint Nextel’s 3G network when it is not.

The concept brings together the best of two worlds: the low cost of voice calls carried over the Internet and the convenience of making calls to any phone number using a major carrier’s cellular network when Wi-Fi isn’t available.

In my own case, on a typical day, I use my mobile phone mostly when I’m not actually mobile: I’m either at home or at work, perfectly positioned to use Wi-Fi at both locations. And I don’t even use the phone as a phone all that much. I use it mainly for e-mail and texts, neither of which requires enough bandwidth to benefit from the power of the fastest data networks.

If you walk into a Verizon Wireless store and buy an iPhone 5, you’ll pay $60 or more a month for an unlimited talk and texting plan, depending on the data allocation for Internet use that you select to go with it. Some of that monthly charge goes toward repaying the carrier for the discounted price that makes a $649 iPhone seem as if it costs only $200. But most of the charge is for gaining access to the carrier’s wireless network.

“We were looking at a mobile industry that had begun to charge extraordinary amounts of money, and we saw an industry opportunity that everybody else was missing: Wi-Fi is the new mobile,” says David Morken, co-founder and chief executive of Bandwidth, based in Raleigh, N.C.

Smartphone apps that offer voice calls using data plans, not minutes allocated for calls, are plentiful. Just last month, Facebook quietly added an option that lets users of the iPhone version of Facebook Messenger place free voice calls to other Messenger users. But using those apps to make a call means the recipient has to run the same app, an irksome requirement that never comes up when using phones alone.

Republic buys access to Sprint’s network on a wholesale basis for calls made outside of Wi-Fi areas. Its business model assumes, however, that Wi-Fi carries the load a majority of the time its phones are used. The company says that its service, even at $19 a month, is a profitable operation on a per-customer basis.

“We don’t have to force people, or even ask people, how to behave,” Mr. Morken says. “Over 60 percent of the time that the phone is being used, on average, our users are using Wi-Fi and that number is only going up.”

Last month, I tested a Republic handset, a Motorola Defy XT. It’s a light smartphone with a small screen, acceptable sound quality and great battery life.

Republic’s Web site gently warns against acting like a “data hog” and encourages its customers to “play nice and try to use Wi-Fi as much as you can.” But scolding isn’t needed: Wi-Fi is faster than 3G, so users have an incentive to opt for Wi-Fi wherever it is available.

The Motorola handset is the only one now offered by Republic, and it costs $259. The phone runs an older version of Android, and it has some first-generation glitches, like losing a connection when a caller starts out on a Wi-Fi network and then leaves the coverage area. (With a click, the call is resumed using Sprint’s cellular network.)

Today most Wi-Fi access requires a logon. But that shouldn’t prove a great inconvenience: you can simply set up the phone once with Wi-Fi at home, then once more at the office. At other locations, users can ignore Wi-Fi availability and use 3G instead.

Mr. Morken says a solution to the Wi-Fi-to-cellular handoff problem has been worked out in the company’s lab, and should be available midyear. Later this year, he also expects to offer more handset models, including one at the high end; he says they will run the latest version of Android.

Matt Carter, president of the Global Wholesale and Emerging Solutions division at Sprint, asserted that the company was happy to serve as Republic’s supplier. When I asked whether Republic’s Wi-Fi-centric model, with its drastically lower price to the consumer, would pose a serious threat to the incumbent carriers, including Sprint, he said, “If the world operated based on just economic decisions, people wouldn’t go buy the most expensive cars on the planet, right?”

Mr. Carter listed reasons that most consumers would prefer the wireless service obtained directly from a major carrier: a wider range of devices and the convenience of placing a call without having to tinker with Wi-Fi setup.

Republic “will resonate with a sliver of the marketplace,” Mr. Carter said. He compared wireless carriers to the major airline carriers, which still control a majority of the market despite low-priced upstarts like JetBlue or Southwest, which he described as appealing only to “a certain segment of the population.”

Philip Cusick, a J.P. Morgan analyst who covers telecommunications, says he doesn’t expect a major shift of customers to Republic Wireless. The price difference isn’t as great as it first appears, he says, when one considers that 80 percent of customers of ATT and Verizon are on family or employer-related discount plans.

MR. MORKEN of Bandwidth.com says he knows that his company must lower the price of its handset — the industry rule-of-thumb for no-contract wireless services is that a simple handset cannot cost more than $99 and a smartphone, $149. But if Republic can offer me an Android phone with a generously sized screen for a reasonable price, I don’t see why, with Wi-Fi available at work and home, I should continue to pay an expensive-sports-car price for my wireless service.

“There’s a reason why the carriers around the world don’t want you using Wi-Fi for voice and text,” Mr. Morken says. “You will soon realize you shouldn’t have to pay what you’re paying today.”

Randall Stross is an author based in Silicon Valley and a professor of business at San Jose State University. E-mail: stross@nytimes.com.

Article source: http://www.nytimes.com/2013/01/27/business/republic-wirelesss-plan-melds-wi-fi-and-network-calling.html?partner=rss&emc=rss

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Q and A With Stuart Elliott

December 18, 2012 by Leave a Comment

A. The song, dear reader, is a duet between the singer Bobby Darin and Johnny Mercer, the songwriter who also occasionally sang on recordings of songs for which he wrote the lyrics, like “Accentuate the Positive” and “Blues in the Night.” In fact, the song was written by Mr. Mercer, along with Mr. Darin, and appears on an album that is also called “Two of a Kind.”

The song was recorded during the period in Mr. Darin’s career after his rock hits like “Splish Splash,” when he had a series of jazz-pop hits in a crooner vein that included “Mack the Knife” and “Beyond the Sea.” “Two of a Kind,” like those songs, sounds as if it had been recorded in a Las Vegas nightclub with Frank Sinatra and his Rat Pack friends seated in the audience. Some call the style bachelor pad music or cocktail lounge music. Ring a ding ding, Apple, you’re so money.

The commercial is by the TBWA/Media Arts Lab division of TBWA Worldwide, part of the Omnicom Group.

Q. There are commercials on TV in New York to encourage business in New York State, called “Big happens here.” The campaign seems to be sponsored by the state’s Empire State Development Corporation.

The question is: What is the jazzy music that runs behind the ad, and who wrote and performed it? It’s a really snappy tune.

Q. I wrote you a few days ago about the song that runs behind the ads encouraging business to locate in New York State. Courtesy of the Shazam for TV app running on my mom’s iPhone 5 — my mom is 78 years old, I’m 53 — the song is called “Cookin’ Boox,” by Detroit Jackson. You can hear it here: http://www.youtube.com/watch?v=n7RtzJMDMVM

I helped myself, with the help of my mom. I thought you’d like to know.

A. Thanks, dear reader, for your question, and for your answer. If crowdsourcing can come to advertising, I guess it can come to Q. and A. features, too. Besides, at this time of year, it is nice to remember that they say the Lord helps those who help themselves.

Article source: http://www.nytimes.com/2012/12/17/business/media/q-and-a-with-stuart-elliott.html?partner=rss&emc=rss

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U.S. Trade Deficit Narrows as Exports Climb

November 12, 2012 by Leave a Comment

Other data released on Thursday showed a drop in new claims for unemployment benefits last week, although a storm that battered the East Coast distorted the figures.

The trade deficit shrank 5.1 percent to $41.55 billion, the smallest shortfall since December 2010, the Commerce Department said. Economists had expected it to widen to $45 billion.

Exports jumped 3.1 percent, the biggest increase in over a year. The gain more than offset a 1.5 percent increase in imports that was centered on purchases of consumer goods.

The report provides the latest positive sign for the American economy, which has appeared to pick up as consumers spend more freely and home construction quickens.

“This was a very encouraging report as the improvement in both export and nonpetroleum import activity suggest improving demand both domestically and globally,” said Millan Mulraine, an economist at TD Securities.

Chinese demand for American products appeared to help exporters in September. China bought $8.8 billion in American goods and services, up 0.3 percent from a month earlier, although those figures were not seasonally adjusted.

Exports to the European Union, where a debt crisis has pushed several countries into recession, were flat. The government does not seasonally adjust figures for countries and regions as it does for overall imports and exports.

The larger-than-anticipated decline in the trade gap suggests that American economic growth may have been higher in the third quarter than the 2.0 percent annual rate initially reported.

Like the gain in exports, the rise in imports provided a positive signal for domestic demand, even though imports subtract from economic growth. Imports of consumer goods rose by $2.7 billion.

Analysts said a good deal of the increase reflected imports of Apple’s iPhone 5. That suggested the increase might be temporary.

A separate report showed the number of Americans filing new claims for unemployment benefits fell last week, although Hurricane Sandy made the data difficult to interpret.

Initial claims for state jobless benefits dropped 8,000 to a seasonally adjusted 355,000, the Labor Department said. That was below the median forecast of 370,000 in a Reuters poll of economists.

An analyst from the Labor Department said that the storm, which slammed into the Eastern seaboard on Oct. 29, increased unemployment claims in some states by leaving people out of work, but that it also reduced claims in at least one state because power failures kept it from collecting claim reports.

The four-week moving average for jobless claims, which smooths out volatility, rose 3,250 to 370,500. Economists think readings below 400,000 generally point to rising employment.

Article source: http://www.nytimes.com/2012/11/09/business/economy/us-trade-deficit-narrows-as-exports-climb.html?partner=rss&emc=rss

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Bits Blog: Tim Cook Apologizes for Apple’s Maps

September 28, 2012 by Leave a Comment

Timothy D. Cook, Apple's chief executive, at the introduction of the iPhone 5.Eric Risberg/Associated Press Timothy D. Cook, Apple’s chief executive, at the introduction of the iPhone 5.

After more than a week of complaints and jokes about Apple’s new mapping service, the company’s chief executive apologized to customers on Friday for the frustration it has caused.

In a letter posted on Apple’s Web site, Timothy D. Cook said he was “extremely sorry” for the anguish caused when the company replaced Google’s maps with its own, acknowledging that the company’s new Maps app did not live up to its standards.

He said that 100 million people were already using the maps, and that the more who used it, the better the service would get. In the meantime, while Apple fixes its maps, he suggested that customers try alternatives available for download in the App Store or on the Web — including Google’s.

In previous versions of iOS, Apple’s mobile operating system, the Maps app was made by Apple and powered by Google’s maps service. But Google, with its Android software for phones, has come to be more of a competitor to Apple than a partner. In iOS 6, the latest version released last week, Apple replaced the old app with a new version that uses mapping data collected or purchased by Apple itself.

Early reactions to Apple’s new maps app were mixed: Some customers said they enjoyed the visuals and new features in the software, but many complained about issues like location searches failing or the maps bringing up incorrect results.

“This is just simply an area where companies like Google and Nokia have had a tremendous head start,” said Ross Rubin, a principal analyst with Reticle Research. “Clearly Apple did not prepare from day one to build its own mapping application.”

Eric E. Schmidt, Google’s chairman, told reporters in Tokyo this week that Apple should have stuck with Google’s maps. Google is seeking to finish a new maps app for Apple’s iOS devices by the end of the year, according to people involved with the effort, who declined to be named because of the nature of their work.

Though Apple has come under criticism for product problems in the past, apologies from the company are rare. When some customers discovered the iPhone 4’s reception could be weakened if the phone was held a certain way, Steve Jobs held a press conference and said he would offer free cases to affected customers, avoiding an explicit apology.

Earlier, when Apple customers complained about the price of the first iPhone dropping so quickly after its introduction, Mr. Jobs penned an open letter with an apology and offered a $100 store credit for those who bought the iPhone for the higher price.

Mr. Cook’s full letter follows:

To our customers,

At Apple, we strive to make world-class products that deliver the best experience possible to our customers. With the launch of our new Maps last week, we fell short on this commitment. We are extremely sorry for the frustration this has caused our customers and we are doing everything we can to make Maps better.

We launched Maps initially with the first version of iOS. As time progressed, we wanted to provide our customers with even better Maps including features such as turn-by-turn directions, voice integration, Flyover and vector-based maps. In order to do this, we had to create a new version of Maps from the ground up.

There are already more than 100 million iOS devices using the new Apple Maps, with more and more joining us every day. In just over a week, iOS users with the new Maps have already searched for nearly half a billion locations. The more our customers use our Maps the better it will get and we greatly appreciate all of the feedback we have received from you.

While we’re improving Maps, you can try alternatives by downloading map apps from the App Store like Bing, MapQuest and Waze, or use Google or Nokia maps by going to their websites and creating an icon on your home screen to their web app.

Everything we do at Apple is aimed at making our products the best in the world. We know that you expect that from us, and we will keep working non-stop until Maps lives up to the same incredibly high standard.

Tim Cook

Apple’s CEO

Article source: http://bits.blogs.nytimes.com/2012/09/28/tim-cook-maps/?partner=rss&emc=rss

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DealBook: With Smartphone Deals, Patents Become a New Asset Class

September 24, 2012 by Leave a Comment

TRADING IDEAS Steven Steger, left, and David Berten, co-founders of Global IP Law Group, a firm specializing in patent legal and advisory work. It can be hard to keep up with the pace of change in the industry: In patent law, you're at the cutting edge of everything, and that's shifting all the time, Mr. Berten said.Daniel Borris for The New York TimesTRADING IDEAS Steven Steger, left, and David Berten, co-founders of Global IP Law Group, a firm specializing in patent legal and advisory work. It can be hard to keep up with the pace of change in the industry: “In patent law, you’re at the cutting edge of everything, and that’s shifting all the time,” Mr. Berten said.

David Berten has spent his legal career as a mercenary student of technological change. He has educated himself in one field after another: chemical coatings, genetics, navigation systems, semiconductors and digital communications software.

Keeping up is a constant challenge. This month, the 48-year-old lawyer was in his Chicago office, discussing past cases while scanning news Web sites and technology blogs for details on Apple’s iPhone 5, which was being introduced in San Francisco that day.

“We have to know what’s in it,” Mr. Berten said. “In patent law, you’re at the cutting edge of everything, and that’s shifting all the time.”

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His firm, the Global IP Law Group, is a sign of the fast-emerging patent marketplace. Global IP, founded in 2009, is one of several boutique firms specializing in patent legal and advisory work that have cropped up recently. Silicon Valley is home to a cluster of them, including Inflexion Point Strategy, Epicenter IP Group and 3LP Advisors.

Though created by lawyers, these companies are hybrids: more merchant banks than law firms. They have legal expertise, but focus on valuing and selling patents and giving strategic advice.

Global IP made its name as an adviser to Nortel Networks, a bankrupt Canadian telecommunications maker that sold its 6,000 patents for $4.5 billion to a group of six companies led by Apple.

The high price paid for the Nortel portfolio set off a bull market in patents that can claim some snippet of smartphone technology. By one estimate, as many as 250,000 patents may touch a modern smartphone. So patents have become defensive and offensive weapons in the smartphone wars, with the major companies suing one another in courtrooms around the world.

A few months after the sale, the big loser in the Nortel auction made its move. Google agreed to buy Motorola Mobility for $12.5 billion, and about $5.5 billion of that was the value of Motorola’s patents, Google said in a government filing this year. Smartphones made by Samsung and other companies are powered by Google’s Android software, making Google and Apple archrivals in smartphone technology.

The smartphone patent megadeals may be over now that the two main adversaries have armed themselves. An attempt by the bankrupt Eastman Kodak to sell 1,000 digital imaging patents stumbled recently, as bids from potential buyers like Apple and Google came in far below the $2.2 billion to $2.6 billion Kodak had said the patents were worth.

But the huge deals, while exceptional, were made possible by a broader trend: patents have become a new asset class.

Traditionally, patents sat on corporate shelves and were occasionally used as bargaining chips in cross-licensing deals with competitors. But that began to change in the 1990s, when technology companies like Texas Instruments and I.B.M. started to regard their patent portfolios as sources of revenue, licensing their intellectual property for fees.

Today, companies routinely buy and sell patents, mostly in deals that draw little attention, for millions of dollars instead of billions. The question, experts say, is how big the market will become.

“Patents are a tricky asset to trade,” said Josh Lerner, an economist at the Harvard Business School. “But there is clearly a huge amount of value in intellectual property. And I think what we’re seeing is the beginning of a lot more monetization and trading of intellectual property rights.”

A sizable specialist industry has developed to build the marketplace for trading ideas. The players include patent aggregators like Intellectual Ventures and RPX, patent brokers like Ocean Tomo and ICAP, hedge funds, investment banks and law firms.

Yet boutique firms like Global IP play an important role, offering specialized expertise and an entrepreneurial approach. “We take patents and try to make money from them in all ways known to man — sales, licensing and litigating, if necessary,” Mr. Berten said.

Global IP opened in 2009 with two lawyers, Mr. Berten and Steven Steger. The firm now has 10 lawyers. About two-thirds of its business is selling patents, and it is working on more than two dozen portfolios. Most work is done on a contingency basis, with a sliding scale of fees that can reach 40 percent on projects that involve litigation, Mr. Steger said.

In the Nortel project, Mr. Berten and his team built a vast database of the Nortel patents, tracking the history of each through the government patent office, citations in other patent applications, uses in license agreements and filings in other countries. “It was a boatload of work,” said George Riedel, former chief strategy officer at Nortel.

Mr. Berten and Mr. Riedel, along with Nortel’s bankers from Lazard, made presentations to companies in Silicon Valley and Europe. Mr. Riedel said Mr. Berten showed an impressive grasp of detail, down to individual patents and claims, when challenged by lawyers at the major technology companies.

His job, Mr. Berten said, was to “identify the value of patents and then demonstrate that value to potential buyers.”

The auction was run by Nortel’s bankruptcy lawyers at Cleary Gottlieb Steen Hamilton. The winning bid of $4.5 billion was well above the $2 billion to $3 billion projected. “Sure, I was surprised,” Mr. Riedel said. “We were fortunate to be in the midst of an ecosystem battle in smartphones.”

In the Kodak bankruptcy, Global IP was brought on in a very different role: as an outside adviser to the unsecured creditors, including Wal-Mart Stores and Sony Pictures Entertainment. Its job was to determine if the proposed auction was undervaluing the patents, and to advise the creditors if they might be better off taking another approach, like licensing the patents.

The very different experiences of Nortel and Kodak point to the many factors that go into pricing patents. Timing, competitive forces, regulation and court rulings all have an effect, said Ronald S. Laurie, managing director of Inflexion Point Strategy.

“Patents are a volatile, spot market,” he said. “This is a market, but a market that is more like art than stocks or oil.”

Ron Epstein, chief executive of Epicenter IP Group, agreed that pricing patents, especially large portfolios, was difficult. But he said he thought corporate trading in patents would become more commonplace, and pricing more routine. Someday, he predicted, patent acquisition costs may be a standard line item in corporate earnings statements.

“By fits and starts, we are moving to a more efficient marketplace for innovation,” Mr. Epstein said.

Calling patents an asset class is shortsighted, said Kevin Rivette, a founder of 3LP Advisors. The larger value of a portfolio, he said, can be as a strategic tool to negotiate lower costs from a supplier or to alter a rival’s product plans.

“You can use patents to change the competitive landscape,” he said.

Article source: http://dealbook.nytimes.com/2012/09/24/with-smartphone-deals-patents-become-a-new-asset-class/?partner=rss&emc=rss

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Economix Blog: Casey B. Mulligan: The iPhone and Consumer Spending

September 19, 2012 by Leave a Comment

DESCRIPTION

Casey B. Mulligan is an economics professor at the University of Chicago.

That the introduction of iPhone 5 increases consumer spending is no triumph for Keynesian economics, but merely an advertisement for plans by the Bureau of Economic Analysis to improve national accounting.

Today’s Economist

Perspectives from expert contributors.

Suppose there were an island economy with 100 able-bodied adults, all of whom work as fisherman, each catching a fish a day. The 100 fish are eaten by the island people, which makes inflation-adjusted daily consumer spending in the economy – or consumption, as economists call it – equal to 100.

(In order to clarify concepts and measurement practices, I have deliberately kept this model economy simple, with no unemployment, liquidity traps and the like.)

Now suppose that 10 of the fisherman decide to quit fishing to build, nurture and tend to an apple orchard. In the beginning, the orchard produces no apples, so consumer spending drops to 90 fish a day, because only 90 adults are out fishing while the other 10 are developing an orchard.

Time passes, and a bountiful 100-apple harvest occurs. Because the apples taste good, the island fishermen obtain all 100 apples from 10 orchard owners in exchange for fish. The apple harvest has by itself boosted consumption in the economy, which suddenly jumped from 90 fish a day to 90 fish a day plus 100 apples.

It would be ridiculous to proclaim that the apple harvest and its effect on consumer spending prove that the economy is plagued by a liquidity trap, or to insist that the immediate effect of the harvest on consumer spending is independent of the quality of the apples. By construction, this model economy has no Keynesian features, yet nonetheless a harvest has a large effect on measured consumption.

Consider now the American economy, in which Apple has just released its iPhone 5, and some economists say they believe that the release itself will noticeably increase aggregate consumer spending. Paul Krugman has gone even further, to assert that the increase is a proof for Keynesian economics and that the “short-run benefits from the new phone have almost nothing to do with how good it is.”

Even if Keynesian economics were completely wrong, economists would expect the iPhone 5 release to cause consumer spending and gross domestic product to be greater than it was before the release, to a degree related to the phone’s overall value to consumers. Note that, as in my island economy, the development of Apple products reduces consumption before the release, because the people working on the coming products are not available to produce consumer goods during that time.

Much of the development work on the iPhone 5 did not, before its release, count as investment or G.D.P. (G.D.P. is the sum of public and private consumption and public and private investment). The national accounts treat research and development activities as intermediate inputs, which means that they are subtracted from revenue for the purpose of determining a corporation’s contribution to national production.

This same is true for, say, Apple’s legal expenses in developing patents (many of which are discussed on the Mactech Web site) and license terms for their new product.

These development activities appear as G.D.P. only when the product is completed and sold. If the product is not valuable, it will not sell and will not count for much, although national consumption could still rise if upon project completion the developers move out of development and into the production of consumer goods.

(Research and development employees usually receive wages during the development phase, but their prerelease compensation comes out of corporate profits).

For the purposes of understanding the timing of economic activity, the national accounts’ treatment of research and development is a weakness, because it recognizes the developers’ activity at the wrong time – only after the product is released. Economists at the Bureau of Economic Analysis (the agency producing our nation’s accounts) are aware of this weakness, how it has become acute with the rise of the technology sector and steps they might take to improve the accounts. They are doing the best they can with the data and economic research results that are available.

Measured consumption rises in the quarter when people buy their new iPhones, not when they actually use them (in my island model, the consumption would be measured when the apples are bought, not when they are eaten). IPhones are durable goods that are used for years after Apple sells them as new, including by second and third owners.

Curiously, the timing of measured iPhone consumption would be markedly different if Apple or cellular carriers had chosen to rent the phones rather than sell them, because the measured consumption would occur each month when users paid their rental fees (the Bureau of Economic Analysis is aware of this weakness and rectifies it in sectors where it is most acute, like the housing sector).

The iPhone 5 release is no occasion to cheer for wasteful government spending, but perhaps does help make the case for a larger budget at the Bureau of Economic Analysis, so that it can continue its progress on measuring the amount and timing of economic activity.

Article source: http://economix.blogs.nytimes.com/2012/09/19/the-iphone-and-consumer-spending/?partner=rss&emc=rss

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Bits Blog: Apple to Announce New iPhone

September 27, 2011 by Leave a Comment

Finally, it’s here.

After months of speculation about timing, shape and sizes, Apple sent out media invites Tuesday for a special event on Apple’s campus next week.

The invitation was sparse, with the headline simply saying: “Let’s talk iPhone.”

The event is Oct. 4 and will be at Apple’s campus in Cupertino, Calif. The invitation says it will begin with a “breakfast and coffee bar at 9 a.m.,” followed by an “executive presentation at 10 a.m.”

According to sources and rumors sprinkled all over the Web, the event will be held to announce the next generation iPhone 5.

The next generation iPhone is expected to have completely revamped hardware. The camera, processor and other internal organs will all receive drastic upgrades, according to reports. The design of the phone will be different too. Last month, images of an alleged iPhone 5 case appeared online, although only for a short period.

Some reports say Apple will release two phones during next week’s conference. An iPhone 5 and a less expensive model, possibly called the iPhone 4GS.

The iPhone has become the primary cash cow for Apple. The company sold 16 million of the phones during the first quarter.

Article source: http://feeds.nytimes.com/click.phdo?i=8fd45884d1d6c4ddf2d3a5d0dbe4e528

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DealBook: Sprint Shares Surge on AT&T Setback

August 31, 2011 by Leave a Comment

1:26 p.m. | Updated Sprint Nextel may get its way — or at least that is what investors are thinking.

Shares of the nation’s third largest cellular carrier were up nearly 8 percent in early afternoon trading on Wednesday, after the Justice Department moved to block ATT’s proposed merger with T-Mobile USA.

Sprint was quick to defend the government’s action on Wednesday.

“Sprint applauds the DOJ for conducting a careful and thorough review and for reaching a just decision – one which will ensure that consumers continue to reap the benefits of a competitive U.S. wireless industry,” Vonya B. McCann, the company’s senior vice president of government affairs, said in a statement. “Contrary to ATT’s assertions, today’s action will preserve American jobs, strengthen the American economy, and encourage innovation.”

Sprint has been a vocal opponent of the deal from the outset. At an industry conference in March, its chief executive, Dan Hesse, criticized the merger, fearing it would hurt consumers. A week later, Sprint formally objected to the deal and called on regulators to block the acquisition.

“The wireless industry has sparked unprecedented levels of competition, innovation, job creation and investment for the American economy, all of which could be undone by this transaction,” Sprint said in a statement in late March.

Sprint has reason to be concerned about the potential merger of ATT and T-Mobile. If the deal went through, the merged company would have nearly 130 million subscribers, leaving Spring a distant No. 3 player with about 50 million customers.

It has been a tough position for Sprint.

Mr. Hesse has made some improvements during his tenure. He has invested in customer service and bolstered the product lineup, including signing an agreement to sell the iPhone 5, the next version of Apple’s popular smartphone. Such moves have helped keep customers from switching to other carriers.

But the company continues to struggle. In the quarter ended June 30, the company lost $847 million, compared with a loss of $760 million the period a year earlier. Meanwhile, shares of Sprint are off more than 35 percent from their 52-week high in June.

Article source: http://feeds.nytimes.com/click.phdo?i=0f92cfec03ad0c0cbfedaab42d5d9528

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