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Sprint upgrade to cost $1 billion

Updated:
Sprint Corp. on Tuesday said it will spend $1 billion to upgrade its PCS network to give customers high-speed wireless Internet access.

The company said it will speed up a plan, originally scheduled to begin in 2005, to offer advanced wireless services to handheld phones and notebook computers with wireless modems. The new service, which hasn't yet been named, will be available in some areas of the country later this year.

Citing competitive reasons, Sprint officials declined to say when the service will be available in Kansas City or other cities.

“Customers are telling Sprint they want applications that take advantage of the higher wireless speeds, and we intend to deliver,” said Len Lauer, Sprint's president.

The move also will allow Sprint to keep pace with market leader Verizon Wireless and other wireless companies, which already have announced plans for next-generation services.

“Imagine downloading music, videos and games to your wireless handset or laptop in a fraction of the time it takes today,” Lauer said. “Or download your company's product inventory or a spreadsheet of a couple hundred kilobytes in a matter of seconds.”

Lauer said Sprint would use EV-DO (Evolution, Data Only) technology across its network. In the past, company officials have indicated Sprint might wait for a different technology — EV-DV (Evolution, Data and Video).

EV-DO is a network upgrade that allows the company to offer average Internet speeds in the 300- to 500-kilobit range, with top speeds up to 2.4 megabytes per second. This makes the wireless service comparable to broadband Internet services offered to homes and businesses through phone or cable lines.

EV-DV technology expands both voice capacity and Internet speed. But the technology is developing too slowly for Sprint to delay an upgrade while remaining competitive in the wireless market.

“There is a large and growing customer demand for services” that will be available through the network improvements, said Oliver Valente, Sprint's vice president of technology development.

The $1 billion upgrade gives Sprint the option to quickly begin offering higher-speed Internet service, while giving the company the option to upgrade later to EV-DV or another technology, Valente said.

Valente said pricing for the new service had not been determined. A similar service being tested by Verizon Wireless, called BroadbandAccess, costs about $80 per month.

EV-DO technology dramatically speeds up Internet download times, which will give Sprint the ability to offer customers a variety of new high-speed applications, including near-TV-quality video on phone handsets.

In 1999, Sprint PCS was the first company to offer nationwide wireless Internet service. The company rolled out a major upgrade in 2002, spending $1.4 billion to offer higher Internet speeds — comparable to dial-up — for business users and consumers.

At the end of March, Sprint had more than 6.2 million wireless Internet users. Between monthly fees and paying for downloaded games and screen savers and other services, those users are spending about $700 million a year for the service.

And use is growing, Valente said.

Sprint users downloaded about 5 million games to their wireless phones in 2003. The number reached 3.5 million during the first three months of this year alone.

The new technology will roll out in some U.S. cities later this year, Lauer said. Sprint said the service will be available in top U.S. markets in 2005.

Verizon Wireless currently is testing EV-DO service in San Diego and Washington, D.C. The company plans to spend $1 billion to upgrade its network to offer the service nationwide in 2005.

Competitor Nextel is testing a different high-speed service in the North Carolina cities of Raleigh, Chapel Hill and Durham. T-Mobile and Cingular also have announced plans for high-speed services.

Although the new Sprint service is expected to cost $1 billion through 2006, Sprint said the project will require only minor changes to its network cell sites — not major infrastructure upgrades.

Most of the $1 billion will be spent in 2005. Nortel, Lucent, Samsung and Motorola each will have a share of the contracts, Valente said.

The Sprint announcement was made at Supercomm 2004, a trade show for communication service providers this week in Chicago.
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