Weekly Wrap: Sprint and Nextel Get Cozy
By Carlo Longino, Fri Dec 17 10:30:00 GMT 2004

The two carriers announce a merger, the ZigBee spec gets ratified, RIM is dealt a blow in its patent fight, and more...

Following last week's rumors, US carriers Sprint and Nextel said this week they would merge to form the country's third-biggest carrier with about 38 million users. Both companies take something out of the deal: Sprint gets Nextel's high-ARPU users and its spectrum, while Nextel gets a badly needed upgrade path, and essentially for free, to boot. The deal raises questions about T-Mobile USA, now a distant fourth in the country, but also for Motorola, Nextel's exclusive equipment supplier.

While other new standards like WiMax and UWB continue to move through the ratification process, the ZigBee specification was approved this week, avoiding many of the problems created by pre-standard products and their incompatible technologies. Products using ZigBee should be on the market next year, with the low-power, low-bandwidth and low-cost technology to be initially used in home automation products.

Research In Motion lost an appeal in its ongoing battle with patent holder NTP, a development that could see the implementation of an injunction stopping RIM from selling its products and services in the US. The court sided with NTP on 11 of its 16 claims, and sent the case back to a lower court for penalties and the injunction to be reconsidered. NTP says that going by the court's 8.55% royalty rate, RIM could owe it more than $130 million.

Number-four handset vendor Siemens was rumored to be selling its device business to Chinese manufacturer Ningbo Bird as a part of an ongoing reorganization of the company. The handset unit has struggled lately, and is under pressure internally to reverse its losses. Siemens already has a distribution agreement with Ningbo Bird, and a deal would mimic Lenovo's purchase of IBM's PC unit: a growing Chinese vendor purchasing a Western brand to support its overseas expansion.

The FCC took initial steps this week to bring wireless connectivity to one of the last remaining islands of isolation -- airplanes. The regulator said it would auction off spectrum specifically for plane-ground data connections, and also said it would begin to reexamine its ban on mobile phone use in flight. The Federal Aviation Administration, however, also bans the practice, and it conducting a study on the issue as well.

The good news for 3G operators is that people are using videophones. The bad news is that they're up to no good. Evidently there's a growing problem in Denmark of young men calling up women with 3G handsets, and flashing them via video call. If carriers don't act to protect users, it could see videophones tossed on the junk heap.

Perhaps the nefarious uses of video calls are driving some users to upgrade their handsets, but not many, according to one analyst firm. IDC says handset sales are set to slow as cameraphones and color-screen models make their way deeper into markets, and 3G doesn't offer enough of an incentive on its on to entice users to buy new handsets. Recent figures from Japan bear out the hypothesis, with sales in October 40% lower than last year -- the 10th straight month of lower sales.

But one negative analyst report can't stop the hype in the mobile industry. The latest target: mobile content, with venture capitalist John Fisher saying that it should be a $120 billion a year industry, since users are willing to spend $10 per month on entertainment content, and there are a billion mobile users worldwide. A few problems with his analysis: who says users will spend $10 a month in addition to their normal phone bills, and what about users in developing nations who don't even spend $10 every month on their total phone bills?

Elsewhere on the site this week, David Pescovitz talks to researchers who say it's time to put atomic clocks in mobile devices, Howard Rheingold shares how one group is investigating the implications of millions of mobile Internet users while Mark Frauenfelder gets Greg Costikyan's views on the future of mobile gaming and explains why ".mobi" is bad for the Web.