Sprint says it's ready for iPhone's traffic

CEO Hesse says high subsidies paid to Apple for the iPhone will be worthwhile

Sprint officials told analysts Friday that the carrier is ready to handle the increased data demand from its sales of the iPhone as the carrier continues a nationwide network consolidation project called Network Vision.

Also, Sprint CEO Dan Hesse sought to reassure investors that its payment of high subsidies to Apple to introduce the iPhone 4S and the 8 GB iPhone 4 to Sprint customers will be worthwhile.

"Without question, the number one reason for [customers leaving Sprint] is having no iPhone," Hesse said in a New York strategy briefing that was also Webcast. "Apple is arguably the best global brand in the tech space. Subsidies are higher on the iPhone than other [phones], yes. This will be one of the most profitable devices we run ... We're expecting this to be quite accretive to our cash flow and profitability over time."

Hesse didn't disclose the subsidy price that Sprint is paying Apple, although unnamed sources quoted in a Wall Street Journal report last week said Sprint is paying Apple $20 billion for 30.5 million iPhones over four years.

Regarding Sprint's network readiness for iPhone traffic, Sprint's president of network operations Steve Elfman said: "We believe we can handle the demand of the iPhone by our proactive work in optimizing content ... We're very happy with that."

Added Bob Azzi, senior vice president of networks at Sprint: "We're prepared for all new device launches, including iPhone. We've been building in the expected impact of the iPhone for a few months and are very well prepared to take the expected growth [in traffic].

Sprint officials made the comments about network readiness for the iPhone after concerns surfaced for Verizon Wireless when it first launched the iPhone 4 in February and after AT&T was widely criticized for network data slowdowns and voice communications problems with the original iPhone in 2007 and subsequent generations.

Network Vision is Sprint's $4 billion to $5 billion project to upgrade its mobile network with improvements to network speed and added coverage while also cutting the number of cell towers needed.

Matt Hamblen covers mobile and wireless, smartphones and other handhelds, and wireless networking for Computerworld. Follow Matt on Twitter at @matthamblen or subscribe to Matt's RSS feed. His e-mail address is mhamblen@computerworld.com.

Copyright © 2011 IDG Communications, Inc.

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