AT&T [ATT] and Verizon [VZ] are today's behemoths in the mobile service provider marketplace. But with its fast network, forward-thinking technology, and value-oriented plans, the next decade of cell users could all belong to the number-three carrier — Sprint [S].
The company's biggest barrier into the big leagues: the fees it has to pay to use the land lines of land-line service providers. When a Sprint mobile phone call is connected at the tower, it must be translated and carried via traditional phone lines, most of which are owned by legacy Bell companies — AT&T and Verizon, in most metropolitan areas. Sprint (and T-Mobile [DT]) are forced to pay artificially-set rates for this privilege, and that amounts to about a third of Sprint's operating costs.
Sprint is betting on nationwide deregulation of this land-line market once the Obama administration takes the reigns in January, arguing that the market price of using the lines would be much lower than the artificially-set rate. That deregulation, which the FCC has already begun, could put the company on equal footing with the big boys in 2009.
What happens once Sprint gets there? As more cellphone users start using their devices for mobile Internet, email and third-party apps, they'll start noticing that Sprint's 3G network is significantly faster than AT&T's and Verizon's in most urban areas. The difference is especially noticable in large cities; here in New York, a Sprint-linked HTC device can load up NYTimes.com about 25% faster than either an iPhone 3G (on AT&T) or BlackBerry Storm (on Verizon).
But therein lies the problem. Who wants some HTC device over an iPhone or a BlackBerry Storm? Even if Sprint keeps adding fantastic services like free Pandora radio, users won't flock until the company has a must-have device.The Instinct, which received accolades as the best phone Sprint has ever offered came close to being that must-have device, but it isn't really a smartphone, it just feels like one. (No platform, no SDK, and no app store).
Sprint has tried other work-arounds to make up for its poor device offerings: its $100 unlimited-everything plan is by far the best plan around, with unending minutes, data, messaging, Sprint TV (which, admittedly, is crappy), GPS, Internet radio, and push-to-talk.
The company is also aggressively building out a 4G high-speed network with Clearwire, and will start selling a 4G/WiMax mobile router on December 21. WiMax is about three times faster than a given 3G network, and can be broadcast much further than traditional signals. Sure, Baltimore is the only city that has WiMax so far, but it's a start.
If the yellow S hopes to out-gun its two major competitors next year, all it needs is one great device. The network, plans, speed, and coverage are all in place. And isn't that the hard part?