An Ignoble Experiment

2. AT&T targets Gogo, others with plan to launch in-flight LTE by 2015

In its most recent quarter, Sprint (NYSE: S) reported improving financials, but the company lost 231,000 postpaid customers and 364,000 prepaid customers. However, Sprint promised to reverse that trend in the second half of this year by posting positive net customer adds in the final six months of 2014. Further, the company said that it has embarked on a marketing campaign touting "America's Newest Network," now available in 20 cities, intended to highlight its more reliable and faster wireless network.

"The finish line is finally in sight," said John Saw, Sprint's CTO, of the company's "rip and replace" network overhaul. Sprint has promised that its Network Vision network modernization plan--which involved the overhaul of its CDMA network and the launch of LTE--will be substantially complete by the middle of this year. "Our new network is only the beginning," Saw added, promising new services on the "best performing network in America."

Sprint didn't immediately respond to requests for details on its new "America's Newest Network" marketing campaign, including how much the company is spending on the effort. Sprint has previously said it would focus on its network in its marketing message as it completes its Network Vision upgrade.

"We'll clearly have the network become a larger and larger part of our message over time," Sprint CEO Dan Hesse said during the company's quarterly conference call.

Sprint also touted progress with its new Framily calling plan, introduced in January, which rewards customers who add additional lines of service with lower monthly pricing. Sprint said that it now counts close to 3 million customers on its Framily plans. Sprint also today introduced a new Spotify promotion for its Framily customers; click here for that story.

Interestingly, Sprint also continued to see significant interest in its Easy Pay device financing program: The company said 29 percent of postpaid device customers selected the payment installment option, up from 7 percent in the previous quarter.

Here are some key metrics from Sprint's quarter ended March 31:

Subscribers: Sprint blamed the loss of 231,000 postpaid customers on "service disruption associated with the company's ongoing network overhaul," and promised that it would begin adding customers in the second half of the year after it finishes its network modernization project. The loss was smaller than some analysts had expected.

In prepaid, Sprint lost 364,000 customers, which the carrier blamed on changes in the Lifeline program recertification process. Sprint sells Lifeline service under its Assurance Wireless brand. The net loss of prepaid customers comes as somewhat of a surprise, considering Sprint's Virgin Mobile and Boost Mobile brands often generate significant customer additions for Sprint. Indeed, Sprint added 568,000 prepaid customers in the same quarter a year ago.

Sprint said it added 212,000 wholesale and affiliate customers during its most recent quarter.

Sprint ended the quarter with a total of 54 million subscribers.

In comparison, AT&T Mobility (NYSE: T) posted 625,000 postpaid subscriber net additions in the quarter, while Verizon Wireless (NYSE: VZ) notched 539,000 retail postpaid net subscribers in the quarter.

In a note to investors, New Street Research analyst Jonathan Chaplin took a decidedly concerned view of Sprint's results: "Sprint faces two major problems in our view: 1) The Network Vision upgrade just doesn't seem to be delivering the improvements that were promised, and; 2) Sprint's pricing is unsustainably high relative to the rest of the industry. On the network issue, with Network Vision 90% complete, churn should be coming down. We understand that the real improvements only take place when markets are 70% complete; however, the number of markets that are 70% complete should be steadily increasing driving an improving trend – instead it is getting worse. When the project is complete in mid-year, Sprint will still trail the other national carriers by a wide margin on core sites and LTE spectrum deployed. It seems that Sprint may not have a truly competitive network until they deploy Spark, and this is still unproven. On the pricing issue, Sprint is priced at a premium to all three national carriers on unsubsidized plans of three lines or more and they are at parity with AT&T on one and two line plans – this simply isn't sustainable."

Others disagreed: "Sprint has been improving over the past few quarters," Jan Dawson, an analyst with Jackdaw Research, told Bloomberg. "They have been marketing the Framily plan and working hard to get churn lower."

LTE network: Sprint said it launched LTE in 41 new cities; the company said it now covers more than 225 million people with LTE and remains on track to cover 250 million by mid-year. As for Sprint Spark, the company said the tri-band LTE service is available in six new cities and is expected to cover 100 million people by year-end. Sprint Spark is now available in a total of 24 markets across the country.

Further, Sprint's Saw said that the company has finished lab testing on its 8 Transmitters 8 Receivers (8T8R) radios, and is currently field testing the technology. Sprint aims to use 8T8R radios to enhance its deployment of TD-LTE on its 2.5 GHz spectrum, improving network capacity. 8T8R makes use of beamforming, which is a more efficient method of sending signals in specific directions to improve data throughput and overall network reliability.

Saw said that Sprint expects to overlay its network with 8T8R radios by the middle of this year and cover 100 million POPs with 2.5 GHz 8T8R radios by end of this year.

Financials: Sprint's quarterly net loss was $151 million in the quarter, which the company said was a 77 percent improvement from the first quarter of 2013. Sprint's revenue increased to $8.88 billion, which Bloomberg pointed out was better than the $8.77 billion that analysts had estimated.

Sprint said its wireless adjusted EBITDA margin clocked in at 25.3 percent in the quarter, up from 19.2 percent in the same quarter a year ago.

ARPU: Sprint's postpaid average revenue per user dipped to $63.52 in the quarter, from $63.67 in the year-ago quarter--Sprint blamed the decline on the increased sale of lower-cost Framily plans and subscribers increasingly moving to its handset financing plans. However, Sprint's prepaid ARPU jumped to $26.45 in the quarter, up from $25.95 in the year-ago quarter. Sprint said the increase in prepaid ARPU was due to increased sales of more expensive data plans for smartphones.

Churn: Sprint's total retail postpaid rose to 2.18 percent, from 2.09 percent in the year ago quarter. In total retail prepaid churn, Sprint recorded 4.35 percent, up from the 3.26 percent in the year ago quarter.

"Churn should continue to come down as we complete the voice network build," Sprint's Hesse said during the company's quarterly conference call.

For more:
- see these two Sprint releases
- see this CNET article
- see this FierceTelecom article
- see this Bloomberg article

Special Report: Wireless in the first quarter of 2014

Read more about: Sprint, John Saw
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Actionable advice from mobile cloud leaders. Visit www.computer.org/Mobile-Cloud

By Mike Dano

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3. Sprint strikes deal with streaming music service Spotify, adds discount for Framily members

AT&T Mobility (NYSE: T) said it will use LTE technology and some of its spectrum to offer in-flight Wi-Fi services starting in late 2015. The action directly challenges current in-flight connectivity players like Gogo, Row 44, Inmarsat and others.

"We are building on AT&T's significant strengths to develop in-flight connectivity technology unlike any other that exists today, based on 4G LTE standards," said John Stankey, chief strategy officer at AT&T. "We believe this will enable airlines and passengers to benefit from reliable high speeds and a better experience. We expect this service to transform connectivity in the aviation industry."

However, many of the details of AT&T's service remain unclear, including what kinds of speeds it will support, what spectrum it will use to power the offering, and what in-flight connections will cost.

Nonetheless, AT&T's entry into the field clearly is noteworthy--Gogo's stock was down more than 22 percent this morning following AT&T's announcement last night. Other in-flight Wi-Fi players include Row 44 and Inmarsat.

AT&T said it will partner with aerospace company Honeywell to install the required hardware onto airplanes to support the service. Honeywell said the service could generate as much as $1 billion in revenue over the next decade, Reuters reported, though AT&T declined to provide its own revenue estimates.

AT&T said it will build "an innovative air-to-ground network in the continental United States" to power the service, likely with its portfolio of existing towers. For planes that fly beyond the reach of AT&T's U.S. network, the companies promised to partner with an as-yet-unnamed satellite provider. AT&T said the system will "provide fast speeds and efficient utilization of spectrum already owned by AT&T," and did not provide details. BTIG analyst Walter Piecyk noted that AT&T said it's considering using the WCS spectrum it bought from Nextwave for the in-flight service, but hasn't decided on that yet. AT&T would need FCC and FAA approval for an in-flight connection service.

As for Gogo, the company argued that AT&T's entry into the market doesn't represent a threat. "We're very comfortable," Gogo CEO Michael Small told the Wall Street Journal. "Our technology portfolio is extensive and will compete with anybody's." Small said Gogo has 10-year contracts with many of the nation's existing airline companies, including Delta Air Lines, American Airlines and Virgin America, and those contracts won't come up for renewal until 2018 at the earliest. In the meantime, Gogo is working to improve and speed up its service.

In-flight Internet is the latest new market for AT&T, which in the past year has also entered the home automation market through its Digital Life brand.

For more:
- see this AT&T release
- see this WSJ article
- see this Reuters article
- see this NYT article
- see this Runway Girl Network article

Read more about: Gogo, AT&T Mobility
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By Phil Goldstein

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4. Samsung's smartphone market share slips to 31% as profits, revenues slow

NEW YORK--Sprint (NYSE: S) announced a partnership with streaming music service Spotify as part of a wide range of music and audio-related announcements at a media event here dubbed "Hear It For Yourself."

Starting May 9, all customers on Sprint's Framily calling plans will get a free six-month trial of Spotify. Once the trial is over, they will get Spotify at the discounted rate of $7.99 per month for Framily calling circles of 1-5 members; for 6-10 member circles, the price drops to $4.99 per month. Non-Framily customers will get a three-month trial and can pay $9.99 per month after that. Spotify CEO Daniel Ek said it was the largest deal the company has ever done.

Earlier this morning as part of its first-quarter results, in which Sprint lost 231,000 postpaid customers, Sprint touted progress with its Framily plans, which it introduced in January. The plans rewards customers who add additional lines of service with lower monthly pricing. Sprint said that it now counts close to 3 million customers on its Framily plans out of its 54 million total customers.

Other carriers are also making movies in the streaming music world. AT&T Mobility (NYSE: T) announced in January that it would offer the new Beats Music streaming service at a discount to its family plan customers.

Beats Music features a catalog of more than 20 million fully licensed songs from all the major labels, including Universal Music Group, Sony Music Entertainment, and Warner Music Group, as well as all independent labels. The service offers unlimited access to curated music (both streaming and downloaded for offline listening) of the songs, albums and playlists. In addition to personalization technology, Beats Music uses human experts to curate hand-picked playlists while streaming.

Under the deal with AT&T, Beats Music is available to AT&T wireless customers on a multi-line account for $14.99 per month. AT&T and Beats Music have said up to five family members across 10 devices can access the Beats Music service and get their own personal music on their own devices.

Sprint made several other audio-related announcements, including a new version of the HTC One smartphone with improved audio and its plans to launch HD Voice service nationwide.

Sprint also announced a new version of the HTC One M8 smartphone with Harmon Kardon's Clari-Fi audio technology to improve audio quality. Harmon Kardon earbuds, valued at $140, will be packaged with the HTC One (M8) Harmon Kardon edition. The audio quality on the One M8, with its dual front-facing speakers, has already been praised, something HTC CEO Peter Chou noted at the event. He said that when partners like Sprint want to have something innovative, they come to HTC.

Earlier this month Harman announced that the 2015 Lexus NX will be the first vehicle to use its Clari-Fi technology, which it claims automatically analyzes and improves the audio quality of all types of modern compressed, digitalized music sources. Most MP3 files are compressed, for instance, which generally reduces audio quality. Harman CEO Dinesh Paliwal said at the event that three to five years of work went into fixing the problem. The technology was first introduced in March.

This isn't the first time Sprint has worked with Harman Kardon. In late February Sprint became the exclusive U.S partner for the Harman's Onyx Studio wireless speaker system. At the time Sprint said the announcement would be the first in a series of initiatives coming this year from the carrier to bring premium audio to mobile devices. The Onyx Studio sells for $399.99 and connects to devices via Bluetooth. Sprint said it aimed to become a "one-stop shopping experience for music lovers, providing an array of devices, music apps and audio speakers."

Sprint also will launch HD Voice nationwide by the middle of the year. CEO Dan Hesse said expects 20 million customers with HD Voice-capable devices by the end of the year. T-Mobile US (NYSE:TMUS) launched HD Voice across its network in early 2013.

For more:
- see this CNET live blog
- see this release

Related Articles:
Sprint loses 231K postpaid subs, launches 'America's Newest Network' campaign in 20 cities
Cricket's Muve Music's fate is up in air following AT&T deal
AT&T partners with Beats for streaming music service
Confirmed: Sprint to pay up to $650 in ETFs for Framily subscribers, matches T-Mobile offer exactly
Sprint kicks off Framily, a group-based calling plan
Sprint CEO Hesse's compensation balloons from $11M in 2012 to $49M in 2013

Read more about: Sprint, Harman, Harman Kardon
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By Mike Dano

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5. FreedomPop to sell refurbished LTE iPhone 5 for $349

Samsung reported flagging profits and smartphone market share in the first quarter of this year, but the company promised improvements throughout the rest of 2014 on the strength of its Galaxy S5 smartphone, interest in the World Cup soccer match and improvements in its display panel and home appliances businesses.

Moreover, Samsung promised increased focus on wearables, business sales and other areas. "Samsung is also poised to expand its new product categories such as wearable devices, strengthen its B2B business footprint through Knox and in the education market and make advancements in its ecosystem for device connectivity," the company said in a press release.

As it forecast earlier this month, Samsung reported a dip in its operating profit and relatively flat sales, year over year. Samsung's operating profit fell 3.3 percent year over year to $8.2 billion. Profit in the company's mobile division fell around 1.2 percent during the same period. And Samsung said its revenue slipped 9 percent quarter-on-quarter "due to weaker seasonality."

According to research firm Strategy Analytics, Samsung shipped 89 million smartphones worldwide in the quarter, good for a 31 percent share of the smartphone market in the first quarter. That figure is down slightly from the 32 percent Samsung commanded in the year-ago quarter.

"This was Samsung's first annual market share loss in the smartphone category since Q4 2009," Strategy Analytics noted. "Samsung continues to face tough competition from Apple (NASDAQ: AAPL) at the higher-end of the smartphone market and from Chinese brands like Huawei at the lower-end."

Samsung's quarter did not include sales of the company's new Galaxy S5 flagship Android phone, which went on sale just as the quarter was ending. Looking ahead to the coming quarter, Samsung predicted modest increases in its smartphone performance: "For the next quarter, smartphone and tablet demand is expected to slightly increase under continued weak seasonality, but Samsung will maintain solid earnings momentum through full-fledged global sales of Galaxy S5," Samsung said. "Based on its differentiated features, and initial response from the market, Samsung expects Galaxy S5 to surpass sales of Galaxy S4."

Overall, Strategy Analytics said the smartphone market grew 33 percent in the first quarter to 285 million units on to "healthy demand" in Asia but sluggish shipments across North America "due to changes in the operator subsidy mix." Wireless carriers in the United States are moving away from providing subsidies on smartphones with two-year service contracts in favor of charging subscribers for the full cost of a device and financing the expense through monthly installments.

As for Samsung's rivals, Strategy Analytics said Apple's share of the smartphone market declined from 17.5 percent in the first quarter of last year to 15.3 percent in the first quarter of this year--Apple is the world's second largest smartphone vendor behind Samsung. In third place, Huawei's share of the market remained the same at 4.7 percent, but Lenovo's share of the market grew from 3.9 percent in the year-ago quarter to 4.7 percent in the most recent quarter; Lenovo is on track to acquire Google's (NASDAQ: GOOG) Motorola smartphone business. Lenovo is the world's fourth largest smartphone vendor.

For more:
- see this Samsung release
- see this TNW article
- see this CNET article
- see this Reuters article
- see this Strategy Analytics release

Special Report: Wireless in the first quarter of 2014

Read more about: Apple, samsung
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By Mike Dano

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SPOTLIGHT ON... Mobile developers clamoring for Facebook ad network

Sprint (NYSE: S) MVNO FreedomPop today announced it will begin selling a refurbished Apple (NASDAQ: AAPL) iPhone 5 for $349. The company also said it will provide service to customers who bring their existing iPhones to the MVNO. Further, in an effort to generate interest among customers who are still on a contract with other carriers, FreedomPop said it will provide free calling and texting services to any iPhone owner through its new over-the-top, FreedomPop-branded iOS app.

FreedomPop will sell a refurbished iPhone 5 for $349.

"It's a pretty big play for us to move into the iOS world," FreedomPop CEO Stephen Stokols said, noting that iPhones command around half of the U.S. smartphone market.

FreedomPop launched its first phone late last year, the HTC Evo Design WiMAX smartphones for $99 without a contract. The MVNO added the WiMAX-capable Samsung Galaxy S II for $169 in February. The company's launch of the iPhone represents FreedomPop's first LTE device; FreedomPop's service runs over Sprint's LTE network.

FreedomPop's service plan for the iPhone is the same as its plans for the Galaxy S II and Evo Design: Customers can get 200 voice minutes, 500 text messages and 500 MBs of data for free per month. Unlimited voice, text and data plans start at under $5 per month.

FreedomPop's goal is to sell 300,000 refurbished smartphones this year, generating annual revenue of $40 million to $50 million, the company told USA Today.

Stokols said that FreedomPop has purchased "thousands, not tens of thousands" of refurbished iPhone 5s for the launch. The company also has an additional 20,000 iPhones lined up to purchase if customer demand warrants additional units.

As for FreedomPop's OTT app, dubbed FreedomPop Free Voice and Text, Stokols explained that it represents a "Trojan horse" strategy for the MVNO. He said that the app is intended to generate interest in FreedomPop's service among customers of other carriers, in the hope they may eventually switch over to FreedomPop. Stokols said that the app will provide free calling and texting services, but will require customers to have some kind of data connection, either through Wi-Fi or cellular.

"That really opens it up for us," he said, noting that most active iPhones are locked into contracts. "Going after those is key for us."

Stokols also provided a general update on FreedomPop's progress in the market. He said the MVNO now counts "hundreds of thousands" of customers, a figure he said has doubled during the past two quarters. However, Stokols declined to provide the exact number of FreedomPop's customers.

Stokols said FreedomPop counts 70 employees, and said its revenues continue to increase, though he declined to provide specifics.

Interestingly, Stokols also said that FreedomPop--which so far has sold services exclusively through its website--plans to expand into brick-and-mortar locations in the coming weeks. He said the company expects to announce a resale deal through a major retailer, and also plans to sell services through smaller dealers.

"We are dipping our toe in offline (sales) this quarter," Stokols said, though he noted that he expects online sales to continue to account for the bulk of FreedomPop's efforts. "We're growing pretty rapidly online."

For more:
- see this USA Today article
- see this FreedomPop release

Read more about: FreedomPop, Sprint, iPhone
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Also Noted

This week's sponsor is PCIA.

Register Today - 2014 Wireless Infrastructure Show

Facebook (NASDAQ: FB) is widely expected to announce a new mobile ad network tomorrow, one that would reportedly compete against the likes of Google's (NASDAQ: GOOG) AdMob and Apple's (NASDAQ: AAPL) iAds. "We are in very early testing for a mobile ad network," confirmed Facebook COO Sheryl Sandberg in a recent call with investors. "We do see an opportunity here to improve the relevance of the ads people see on and off Facebook. It's really the early days and we're in the early testing stage."

And mobile app developers are clamoring for the new network from Facebook.

"It will have a massive impact," said Michael J. Becker, a consultant with mobile marketing firm mCordis. "Most ad network targeting is very limited when it comes to demographic and interest-based parameters. Many networks have created 'interest channels' based on the content of the website, which is a decent proxy, but Facebook has direct data on the interest of the user. This is huge, because most advertisers want an audience first, then they apply the context to increase the relevance in ad messaging. Facebook would provide the first method of doing this at true scale."

For more on the potential impact of a Facebook mobile ad network on mobile app developers, check out this FierceDeveloper special report.

Quick news from around the Web.

Rumor: HTC's Plastic HTC One M8 Ace Will Have Samsung Galaxy S5's Specs http://t.co/mbwrbhyWSm (@IntoMobile) April 28, 2014

> FCC Chairman Tom Wheeler will talk about net neutrality during an appearance in Congress on May 20. Article

> The European Union won't fine Motorola and Samsung over patents. Article

> Huawei said it tested LTE Advanced Category 6 technology and reached 300 Mbps peak speeds. Article

> Netflix will pay Verizon for direct access to its network. Article

> Nokia's handset business, which is now under the control of Microsoft, reported a $452 million loss in its final quarter as a stand-alone company. Article

> Amazon opened a dedicated store for wearables. Article

> LG reported a significant rise in first-quarter operating profit, and predicted continued success in its mobile division in the coming quarter based on expected sales of its forthcoming G3 flagship Android smartphone. Article

> Nokia elevated soft-spoken yet intensely competitive Rajeev Suri to its president and CEO position, which was no surprise given his deft handling of the turnaround at the firm's network infrastructure unit, which he has led since 2009. Suri will assume the combined role on May 1. Article

> T-Mobile US announced a new partnership with SFX Entertainment and Syco Entertainment to "produce a pioneering television show revolving around the booming electronic music culture and showcasing and cultivating fresh new EMC DJ/producer talent and creative event production skills." Release

Mobile Developer News

> Being labeled a "featured indie" app or game doesn't help developers. Editor's Corner

> There is a 60 percent chance that consumers who don't use an app again within a week will never use it again, according to a recent study from Localytics. Article

Telecom News

> Iowa Gov. Terry Branstad's proposal to expand broadband services in rural areas suffered a major setback as the state's House of Representatives voted against the bill, reports The Des Moines Register. Article

Cable News

> In what the two parties described as a "first-of-a-kind agreement," the National Cable Television Cooperative (NCTC) has cut a licensing deal with Rovi for its digital terminal adapter (DTA) guide, effectively giving all-digital customers more features for secondary televisions. Article

> Univision CEO Randy Falco is opposed to Comcast's $45.2 billion acquisition of Time Warner Cable because it could harm Hispanic TV viewers. Article

And finally… Domino's Pizza introduced a 3D imaging app for mobile ordering. Article

Madden: DAS or small cells? A case study

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