Easy transition likely for customers

December 16, 2004|By Dan Thanh Dang | Dan Thanh Dang,SUN STAFF

The proposed $71 billion merger between Sprint Corp. and Nextel Communications will create the third-largest wireless carrier in the country with the expanded ability to offer digital service in all 50 states, Puerto Rico and the Virgin Islands.

That's the good news.

What the 40 million customers of the newly combined telecom titan want to know even more is: What's the bad news?

That's hard to answer at this early stage, consumer experts and industry analysts said yesterday. If carried out well, the transition period to create the new Sprint Nextel should have little to no negative effect on customers, the experts said.

What customers might want to brace themselves for, however, is an industry with fewer players and less competition in the future.

The Sun asked Janee Briesemeister, senior policy analyst at Consumers Union; Mark Cooper, research director for the Consumer Federation of America; and Ken Hyers, a wireless analyst for market research firm In-Stat/MDR, to shed light on what might be expected from the merger:

How long will it take to integrate the two network technologies?

It might take years. Kansas-based Sprint uses Code-Division Multiple Access (CDMA) technology, and Virginia-based Nextel uses Integrated Digital Enhanced Network (iDEN) technology to run their network.

The companies will likely let customers choose between the two networks, Hyers said, while developing a handset that will be compatible with both.

Will customers feel any effects from a move to combine networks?

Not likely, because both companies are building out their separate networks and will continue to do so even after the merger. After they combine forces, the networks will operate side by side until Nextel slowly changes its technology over to CDMA, Hyers and Cooper said.

That means customers of both companies could see improved reliability and broader service territory.

What benefits will Nextel customers get out of the merger?

Many more service options. For example, Nextel currently offers its customers long-distance service through a vendor, Hyers said. In a merger with Sprint, the new company will be able to offer customers a bundled package of services at better rates, which might include long distance, local calling and high-speed broadband.

What benefits will Sprint customers get out of the merger?

Nextel has a strong track record of satisfying its business customers; its subscriber turnover is the lowest in the industry, though its average bill is higher than most. Sprint will learn valuable lessons on how to deal with customer service and outages.

Will Nextel's popular and proprietary push-to-talk service be affected by the change?

Not likely. Sprint has been trying to develop its own push-to-talk technology, but the results have not been comparable to Nextel's. Also, Nextel has been working with San Diego-based Qualcomm for two years to develop a new push-to-talk technology called QChat that can work on a CDMA platform.

Will Sprint Nextel customers have to buy a new handset to operate on the combined network?

In the long run, probably, but not right away. The two companies will develop a handset that will be compatible with both systems, but it's likely the charge will be minimal to customers.

Should customers of both companies expect dropped calls, no coverage signals or other service disruptions during the merger?

While there are bound to be bumps along the road, the disruptions should be minimal. Problems might not show up until the billing systems of both companies are combined, Briesemeister and Cooper said. At that time, it might be clearer how many customers get billed for roaming on the other network, for example, or get double-billed for the same service.

What larger concerns should consumers have?

In terms of the Sprint Nextel merger, no specific concerns come to mind. But in the long term, the merger will mean there will be only four major players in the wireless industry - Sprint Nextel plus the newly merged Cingular-AT&T, Verizon and T-Mobile.

Over time, the consumer advocates said, that could mean less competition, higher prices, fewer service plan options and less emphasis on developing new technology.

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