News Blog

It's that time of year again when U.S. cell phone executives gather at the semi-annual CTIA Wireless trade show to show off new products and hobnob with each other. But this year it seems like some companies are working extra hard to clear the air before they hit the Las Vegas show floor.

Trade shows are typically where companies make new product announcements. And while I'm sure there will be some new handsets and services announced at CTIA, my feeling is that some of the more troubled companies like Sprint Nextel and Motorola, will use the conference to let the press, analysts, and investors know they have a plan moving forward.

This may not be a new strategy for companies that have hit a bumpy road, but it's a trend I noticed this week as I was bombarded with a one-two punch on a couple of big stories in the wireless industry.

First, there was a story on The Wall Street Journal Web site on Tuesday night that cited unnamed sources who said Sprint Nextel was talking to Comcast and Time Warner about helping fund a joint venture between Sprint and Clearwire to launch a combined WiMax network.

The following morning, Motorola announced that it was spinning off its handset business after a two-month internal study about what to do with the struggling cell phone division that has steadily been losing market share.

And then finally AT&T and Qualcomm's MediaFlo USA announced that AT&T would finally be launching its live mobile TV service that uses the MediaFlo network, providing some positive news for a service that has seen lackluster success since it was launched more than a year ago on the Verizon Wireless network.

In one fell swoop, Sprint Nextel, Motorola, and Qualcomm, MediaFlo's, parent company have managed to preempt many of the questions they were likely to be bombarded with from reporters and analysts at the upcoming show.

"A show like CTIA gives us a date to drive towards in making decisions and getting our stories together," said Gina Lombardi, president of MediaFlo USA. "We could have waited and announced the AT&T news next week, but we wanted to have the news out there so we have a story to tell. This show for us is really about being able to communicate our message."

For Sprint Nextel and Motorola, which are each going through massive upheavals as brand new CEOs try getting their businesses back on track, CTIA offers an opportunity to get a more positive story into the media.

For the past several months, Sprint's investors have been questioning the company's plans to continue funding a new 4G wireless network based on WiMax technology as it steadily continues to lose customers from its traditional cell phone business. The company's new CEO Dan Hesse has said he plans to refocus the company's attention on its core business. Rumors have been floated that Sprint might spin off its WiMax network, known as Xohm, and combine it with Clearwire's network.

Such a spin-off could make sense, especially if Sprint and Clearwire can find someone else to pay for it...like Comcast and Time Warner, as the aforementioned Journal article suggested.

According to the Journal, Hesse has been "pressing all parties to wrap up discussions in time for the wireless industry's trade show next week in Las Vegas, so Sprint can have something to present to investors."

If the deal could be announced before CTIA, Hesse could re-emphasize Sprint's commitment to its traditional business and finally put to rest concerns that investors have about its WiMax initiative.

Meanwhile, Motorola is also facing some tough challenges. The company, which has seen its handset market share plummet due mostly to a lack of compelling new products, said in January, amid pressure from activist investor Carl Icahn, that it would consider separating its handset business from the rest of the company in an effort to increase shareholder value and revive the struggling business. On Wednesday, it officially announced its plan to break the company into two publicly traded entities.

While some people may say the timing of the announcement the week before CTIA was purely coincidental, I would disagree. For one, the company made the announcement before it has even found a CEO for the new handset company, a move that several analysts noted as unusual.

My guess is that Motorola wanted to clear up questions about the fate of the beleaguered handset business before the big industry gathering, so the company could try to focus attention on new products that are being launched by the other half of Motorola's business, the side that sells set-top boxes to cable companies and communications gear to large companies and governments.

Of course, Qualcomm's MediaFlo isn't in the same sort of dire trouble that Sprint and Motorola are in, although the company has been beat up the past year in a series of legal battles with Broadcom and others. But a year after MediaFlo launched its live mobile TV service with Verizon Wireless, questions are brewing about mobile TV's success, or rather its lack of success. Earlier this week, Qualcomm's CEO Paul Jacobs told an audience at a conference in Hollywood that subscriber uptake on MediaFlo has been going slower than the company would like, according to RCR Wireless News.

But news that AT&T, the largest cell phone operator in the U.S., is getting ready to launch the service in the next couple of months could help spur renewed enthusiasm.

"CTIA has become a focal point for the industry," said MediaFlo's Lombardi. "It's where we meet with press and analysts to communicate our message. So for Motorola and for us with the AT&T mobile TV announcement this week, it's about having our stories already out there."

AT&T said Thursday that it will start offering live mobile TV service from MediaFlo in May, but will anyone be watching?

AT&T first announced its partnership with MediaFlo in February 2007. Back then it said it expected the service to begin by the end of 2007. AT&T spokesman Mark Siegel told Reuters the company waited until May to offer the service because it was "a brand new service on a brand new network, and two brand new devices."

The new service will operate on two new handsets, the LG Vu and the Samsung Access. Subscribers will get access to eight channels of live TV plus two exclusive channels. AT&T said it would make pricing information available in May when the service officially launches.

MediaFlo USA is a subsidiary of wireless chipmaker Qualcomm. Using analog broadcast TV wireless spectrum it bought several years ago, MediaFlo has built a wireless network to deliver broadcast TV service to mobile devices.

Verizon Wireless, which was the first wireless provider to work with MediaFlo, has been offering the service for more than a year. Verizon hasn't published specific subscriber numbers, but Qualcomm's CEO Paul Jacobs said during a speech at the Tech Policy Summit in Hollywood on Wednesday that the uptake has been going slower than the company would like, according to RCR Wireless News.

Jacobs blames the carriers for not advertising the service enough. He said that carriers might be waiting for MediaFlo to increase its coverage, which he said will happen in February 2009 when TV broadcasters will transition to digital TV, the article said.

Qualcomm, which owns spectrum for the analog TV Channel 55, has had to negotiate with broadcasters in each market to be able to use the spectrum that some of them have used to broadcast TV. The network is currently operating in about 55 markets and is available to about 130 million people, said Gina Lombardi, president of MediaFlo USA. Markets where MediaFlo has launched include Los Angeles, New York, Chicago, Dallas, Orlando, and Philadelphia.

But some mobile experts question whether people really want to watch TV on their phones. Verizon is charging $15 a month extra for eight channels of live TV. Perhaps the price point is still too expensive for consumers who on average spend about $40 to $50 a month on cell phone service. And as the economy dips further into a recession, I question how willing people will be to spend extra money on what I'd consider an unnecessary service like mobile TV.

It will be interesting to see AT&T's customers' response to the live TV service. AT&T already offers an on-demand video service to customers who buy certain 3G data packages.

If consumers don't fall in love with live mobile TV it could spell trouble for Qualcomm's MediaFlo USA, which has spent millions of dollars acquiring spectrum and building the network. Right now the company wholesales the service to mobile operators. But Verizon and AT&T are currently its only customers.

Lombardi said the company is in talks with other wireless operators in the U.S. But the company is also considering offering its service on any device with a small screen.

"We've had a lot of interest from car manufacturers," she said. "We've even had refrigerator manufacturers ask if we could provide TV service to the tiny screens they put on refrigerators."

Lombardi said the service could be sold much like satellite radio, which allows people to subscribe to a monthly service for about $10 per month. If subscribers want satellite radio service on additional devices, they get a slight discount on the monthly subscription for the second and third device.

"We are looking into all of these options," she said. "If there's interest, we don't want to turn away from any opportunity knocking at our door."