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For years the US wireless industry has lagged behind its counterparts in Asia and Europe, particularly when it comes to technology adoption. But the US is catching up and Len Lauer, the chief operating officer of recently merged Sprint Nextel is one of the industry leaders driving that change.
“We see enormous opportunities,” says Lauer, who aside from running the third largest mobile carrier in the US, is also vice chairman of the Washington DC based Cellular Telecommunications and Internet Association, the leading US trade association.
But he also accepts that wireless carriers face some real challenges. In particular he says US carriers, like many of their international counterparts, need to work hard to improve both customer service and customer satisfaction. “The industry has done a good job, but we could do better,” he admits.
These days, he says, mobile phone users expect the same reliability and coverage they have grown used to with fixed line telephony. That means carriers have to spend more on expanding coverage and on reducing call failure rates.
Wireless substitution and the growing proportion of cellular calls that start or terminate inside buildings means mobile carriers also need to improve in-building coverage. “We believe WiFi is a good service for expanding in-building coverage,” Lauer says.
As a result he sees a growing market for combined cellular/voice-over WiFi (VoWIFi) handsets, particularly for use in the office. Like Verizon Communications, the other leading wireless carrier that used Qualcomm’s CDMA (Code Division Multiple Access) technology, Sprint Nextel is also investing heavily in its 3G EV-DO (Evolution Data Optimised) network.
But unlike Verizon which has fought plans by a growing number of cities across the US to launch ‘Muni’ WiFi mesh networks, he sees them as an opportunity, not a threat. “I see it as important that we offer access to hotspots,” he says. Like other carriers, Sprint Nextel is banking on strongly growing data revenues to offset stagnating or falling revenues from voice traffic.
Year on year, Sprint Nextel’s data revenues are growing by about 40 per cent compared to the industry average of 35 per cent but he sees plenty of further upside potential. Data revenues in the US represent about 7 per cent of overall revenues compared to about 20 per cent in Europe and Asia, he says.
Mobile operators in the US are looking to services like music and games downloads, and increasingly to Mobile TV and video services to help boost those figures. Sprint for example already offers 20 live TV channels.
Equally exciting, says Mr Lauer, are the opportunities to offer converged services, for example Sprint recently announced a joint venture partnership with a consortium of leading US cable companies to develop and offer customers new services.
But he also cautions that wireless carriers need to be careful not to get carried away by technology and to make sure it is “very simple to use.” As an example he cites Sprint’s new Music Store service that enables customers to download music directly to their handsets instead of having to use an intermediate PC.
In terms of other big trends, Mr Lauer also expects the wave of consolidation that swept through the US communication industry last year to continue because of the economies of scale that it generates, and because both the wireline and wireless industries are moving towards the adoption of converged IP-based network architectures.
But for the moment he says, the big US wireless carriers including Sprint Nextel have their hands full integrating their recent acquisitions so the next round of M&A activity could well take place among the second tier and regional carriers in the US and, as the recent O2 deal demonstrated, elsewhere.