Sprint Nextel looks to expand Kindle model for new revenues

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Sprint Nextel looks to expand Kindle model for new revenues

By CAROLINE GABRIEL

Published: 25 March, 2009

READ MORE: Sprint Nextel | e-book

Sprint Nextel is looking to develop new revenue streams and use up spare capacity in its network, by increasing its support for embedded wireless systems. The US carrier's network is already used for some third party services such as Amazon's Kindle e-book offering and some enterprise machine-to-machine systems. Now The Wall Street Journal reports that it is in talks with potential partners such as Garmin - maker of personal navigation devices - Kodak and memory stick company SanDisk.

Increasingly, non-phone devices are sporting wireless connections and support IP-based communications and applications, such as transfer/upload of photos to image stores or social networks, or location awareness apps for PNDs. In these situations, the carrier network is invisible to the user, and the cellco does not have to invest in any billing or customer management systems, but collects fees based on the amount of data transmitted.

Among the US cellcos, Sprint led the shift into using some network capacity to support virtual operators (MVNOs), and that strategy revived its fortunes, temporarily at least, before the merger with Nextel in 2005. Now CEO Dan Hesse has said it will take the next step and increase business from wholesaling - likely to be a key feature of many business models, including those of Sprint joint venture Clearwire, in the mobile internet world. Wholesale, Hesse told the WSJ, is "an important contributor to revenue now, and will be an important contributor for some time. We'll get the lion's share of new products that need a cellular connection."

Wholesale subscribers have grown by 27% to 8.1m since 2006, though remaining a tiny part of Sprint's total - but it has spare network capacity with the decline in its regular user base, the loss of some MVNOs such as former local lines unit Embarq. It has already been taking advantage of the spare capacity on the former Nextel iDEN network to support very low cost flat rate tariffs.

However, with all the big four cellcos chasing the embedded business, Sprint will have to convince likely partners that its network will deliver sufficient quality. It has announced one success this week, with Ford Motor - Sprint will provide the connectivity for 2009 Ford F-Series and E-Series vehicles, which will incorporate an in-dashboard 3G PC system developed with Microsoft, to support fleet management, salesforce applications and even consumer access. These vertical market services could be a strong area for Sprint, since Nextel has strong heritage there. The DirectConnect push-to-talk iDEN service has been used extensively by field workers and fleets.