#TBT: Motorola Chases the iPhone; FCC Approves Rural Cellular Acquisition; Verizon Rolls Out Rev-A… This Week in 2008

Editor’s Note: RCR Wireless News is going all-out on “Throwback Thursdays” and is digging into our archives to bring back the biggest headlines from the past. Fire up the time machine, put on those sepia-toned sunglasses, set the date for #TBT and enjoy the memories!

Motorola is chasing the iPhone

Motorola Inc. says its troubled phone business is improving and will be stronger by the end of the year, but CEO Gregory Brown won’t say when he expects the unit to break even. Still, Brown insists the division, which lost $346 million in the second quarter, will continue to improve with the help of more profitable new phones and continued cost cuts in the second half of this year. Motorola shares jumped 12% Thursday on surprise news that the communications giant posted a small profit. Brown said Crain’s Chicago Firm Thursday that the company is not planning any further layoffs beyond the 2,600 it announced in April. Motorola, based in Schaumburg, has about 15,000 employees in Illinois. Brown said he expects to release about 34 new phones by the end of the year, more than double the number introduced in the first six months of the year. That will likely be a response to Apple Inc.’s popular iPhone, a Web-friendly phone with a touch-sensitive screen. The phone is now in its second generation, joined by look-alikes from most rivals except Motorola. Brown said new phones in the second half of the year “will have capabilities that include touch and messaging . . . and we’ll look to improve our smartphone portfolio.” … Read more

Motorola gets new co-CEO to get its handset division back on track

Sanjay Jha, the newly minted co-CEO of Motorola Inc. and the designated turnaround artist for its handset division, told an audience of analysts and media this morning that within 90 days he would overhaul Motorola’s device platforms, product roadmap and make hires in areas he doesn’t have experience in. That last bit includes product design, or what Jha called “compelling form factors.” “You’re going to see me make some strategic hires in areas I don’t have experience in,” Jha said during a brief presentation to analysts and media this morning with co-CEO Greg Brown. Jha said it would take a year for devices under his watch to hit the market. The morning presentation offered some insights into Jha and Brown’s perspectives on the path forward. One analyst — Maynard Um at UBS — asked about the intended capital structure for a spun-off handset division, since that would be key to Jha’s decision to take his new job. Brown seemed to leave open the possibility that the company would remain in one piece. He said a spinoff is “potentially” planned for the third quarter of 2009, depending on financial and operational success in the handset division, as well as the findings of the 150 people currently working on spinoff issues. Jha, 45, said his discussions with Motorola began in late June, meaning he had six weeks to look under the hood in terms of due diligence, though he cited his four-year working relationship — Jha joined Motorola from chipset giant Qualcomm Inc. — with the company as additional insight into the company’s handset business. Jha said he preferred Motorola’s current diversity of device platforms, but that he would approach any evaluation — and the question of whether to limit the number — with an open mind. The company may not move forward with every product on its roadmap, but Jha said it was “not realistic” to make changes to those products in the short term. The new handset leader affirmed the importance of the 3G device market and acknowledged Motorola’s weakness in that area. … Read more

FCC Approves Verizon’s Acquisition of Rural Cellular Corp.

The Federal Communications Commission has given the green light to Verizon Wireless’ $2.67 billion purchase of Rural Cellular Corp., saying the transaction and a separate deal involving the No. 2 wireless carrier raised several important policy issues. The FCC, like the Justice Department before it, conditioned approval of the Verizon Wireless-RCC acquisition on the divestiture of six licenses in Vermont, New York and Washington. It’s not yet clear where the divested spectrum will go. While not a blockbuster deal by today’s standards, the transaction has been highly controversial and the government’s investigation has dragged on over competition, roaming, consumer and other issues prominently raised by Sen. Bernie Sanders (I-Vt.) and state agencies. The two Democrats on the five-member FCC, led by the GOP, specifically alluded to those issues in separate statements tied to their tepid support for the Verizon Wireless-RCC partnership. “While I am always concerned about additional concentration in the wireless market, these divestitures will improve competition in the affected areas (compared to an outright merger) and I am glad we need them,” Commissioner Michael Copps said. “I think it is especially important that Verizon will be selling all of RCC’s spectrum, facilities and customers in Vermont to the nation’s largest GSM carrier — it will ensure that native Vermonters and visitors to the state who happen to have GSM phones can continue to use their devices.” Copps’ comments seem to indicate that AT&T Mobility will be the new home for the GSM network that RCC operated in the Northeast, but there is still some uncertainty about how much spectrum will be included in the spinoff. … Read more

Verizon rolls out Rev-A for PTT

Verizon Wireless has re-established itself in the push-to-talk arena. As promised earlier this year, Verizon Wireless has released two new PTT phones that run on the carrier’s CDMA2000 1x EV-DO Revision A network. The new devices are the Motorola Inc. Adventure V750 and the Casio G’zOne Boulder, both of which have rugged construction, hinting at their target audience. Verizon Wireless spokeswoman Brenda Raney said the new phones run on the Motorola/Winphoria platform, the same one Verizon Wireless has used for its previous push-to-talk phones, only now on its faster network. Early reports suggested the service would run on Qualcomm Inc.’s BREWchat platform, which took some cues from Qualcomm’s Qchat service, which is exclusive to Sprint Nextel Corp. Raney said the new phones are compatible with the older devices, but because the older phones run Rev. 1, they’re not compatible with the older devices. A, both devices will experience the slower non-Rev. A speeds when paired. Raney said the new devices will work in 1x markets, but they will run at the slower speeds. “They’re all compatible,” Raney said. “The biggest difference is speed.” Speed ​​has been an issue with previous PTT offerings. Initially, the service’s packet-based offerings running on CDMA networks were criticized for falling far short of the sub-second setup time and intracall latency of Sprint Nextel Corp.’s iDEN service. AT&T Mobility and Alltel Communications LLC managed to overcome those differences with a circuit-switched-based offering from Kodiak Networks, but that also fell short of the outright speed of iDEN service. … Read More

Unlimited service offers appear in the space without a contract

Just as Ronald Reagan claimed with his trickle-down economic plan, wireless customers are starting to see unlimited service plans trickle down to cheaper price points and, in some cases, to offerings that don’t require a burdensome contract. Last week, Tracfone Wireless Inc. subsidiary Net10 jumped into the increasingly popular unlimited-service-plan game with its new Net10 Unlimited Plan, which offers unlimited calling and texting for $80 per month. As Tracfone has always done, the unlimited plan requires no contract or credit checks, though a customer will need to set up a recurring payment system using a credit card. The offering is a rival to Virgin Mobile USA Inc. — that carrier’s recently launched Totally Unlimited plan also offers unlimited calling with no credit check or contract for $80 per month — with the option of unlimited texting, unlimited use of Net10 Mobile Web and unlimited calls to directory assistance. Virgin Mobile USA allows customers to add unlimited texting for an additional $10 per month, as well as unlimited data service. Both offerings trump the plans of the nation’s largest carriers by not requiring a customer to sign a contract and, in some cases, undercutting their larger rivals on price. AT&T Mobility and Verizon Wireless offer unlimited calling plans for $100 a month, while T-Mobile USA Inc. offers unlimited texting with its $100-a-month calling plan and Sprint Nextel Corp. adds a bushel of data deals with its unlimited plan.
The plans could also put pressure on the flat-rate, unlimited calling plans of regional operators Leap Wireless International Inc. and MetroPCS Communications Inc. … Read more

Eighth largest handset ODM spins off to VC firm

Safran said it will shell out $343 million to spin off its troubled Sagem Mobiles division to venture capital firm Sofinnova. Sofinnova plans to rebrand the handset maker as Sagem Wireless, with Safran holding a 10 percent stake. The company will develop and market products under other brands for operators or other manufacturers, as well as for fashion and sports companies and high-end goods makers. Safran will absorb the $343 million in transfer costs and write-downs. Sagem Wireless will retain 310 employees from the former Safran outfit, 240 of whom will work in China. Another 250 members of Sagem Wireless’ research and development team will be transferred to Esmertec and Purple Labs – companies in which Sofinnova is an investor – and will be based at Sagem Wireless’ headquarters in Paris. “I am convinced that this will be a successful solution as the ODM (Original Design Manufacturer) business model clearly addresses specific needs, while at the same time we will reduce our fixed costs by integrating the R&D teams of Sagem Mobiles and companies in the Sofinnova portfolio,” said Jean-Paul Herteman, CEO of Safran.
Sagem Mobiles is the eighth-largest phone maker in the world, according to IDC, with revenues of just over $1 billion last year. The company will continue to operate as it does until the transaction closes, which is expected by the end of this year. … Read more

Nortel’s losses are mounting

Shares of Nortel Networks Corp. fell nearly 15% after the infrastructure provider reported relatively flat second-quarter results but warned of future instability in the U.S. market.
The Toronto-based company posted Q2 revenue of $2.62 billion, up 2% year over year. Of the total revenue, just over $1 billion came from carrier networks, down 2% from the year-ago quarter and down 15% from the first quarter of this year.
Nortel said the carrier’s revenues benefited from its joint venture with LG Electronics Co. Ltd., but were offset by declines in CDMA and legacy switching sales. Rival Alcatel-Lucent reported similar problems in the CDMA market earlier this week. Net losses rose to $113 million this year from $37 million in the second quarter of 2007. … Read more

Check out the RCR Wireless News Archives for more past stories.