Sprint, perennially America’s #3 wireless phone company, faces some of its biggest challenges not from super-sized Verizon Wireless or AT&T, but from Wall Street over the company’s upgrade investments and environmental policies.

“I still get crucified for deciding to carry the Apple iPhone because the investment is significant and the payoffs are long term,” CEO Dan Hesse told attendees at a conference sponsored by Fortune magazine. “I deal with that quite a bit.”

Hesse’s vision of an upgraded 4G LTE network for Sprint Nextel comes at a cost: technology upgrades and investing profits back into the business.  Hesse also wants to be sure the company maintains environmental sustainability, with attention to everything from renewable energy sources to socially-responsible recycling of retired cell phones.

Wall Street to Hesse: Don't Get Comfortable

In response, Wall Street has been demanding Hesse’s hide.  One investment firm even predicted the imminent demise of the wireless phone company.

The iPhone, the smartphone wireless carriers cannot afford to be without (just ask T-Mobile, which continues to bleed contract customers), has posed a major financial challenge for Sprint Nextel.  Apple’s wildly popular phone commands a high wholesale price and purchasing commitments that make investors’ eyes bleed.

In October, Sprint committed to purchase 30.5 million iPhones from Apple for $20 billion.  That threatens to drain cash on-hand to cover the huge subsidies new iPhone buyers get on their phone purchase. The company will gradually earn that subsidy back over the length of the traditional two year service contract, but many on Wall Street are upset Sprint committed to an order of that size.  One Wall Street firm — Sanford C. Bernstein — downgraded the company’s stock to “underperform,” and one analyst at the company — Craig Moffett — even predicted Sprint’s bankruptcy.

Sprint’s plan to spend up to $5 billion on its forthcoming LTE 4G network won Hesse no favors in New York’s financial district either.  Sprint’s Network Vision plan will allow the company to keep up with AT&T and Verizon’s aggressive 4G rollouts, but after chief financial officer Joe Euteneuer laid out the associated financial plan to pay for it, calls for Hesse’s head resumed.

“There is a disconnect with Wall Street because if you’re building a brand, it does take a long time,” he said. “It’s hard to quantify.”

Wall Street doesn’t think much about investing in environmental initiatives either.  Hesse believes corporate environmental responsibility will pay off over the long term, ultimately reducing some of the company’s expenses.  But spending money short term to save money long term leaves investors cold.

“A lot of these environmental investments don’t hit that payoff period,” Hesse said. “The Street likes the expense savings, but the environmental benefits go right over their heads.”

[flv]http://www.phillipdampier.com/video/CNBC Faber Report Sprint Beats Expectations 4-25-12.flv[/flv]

CEO Dan Hesse may win a temporary reprieve as Sprint released better-than-expected results today for the latest quarter. Average revenue per user grew 6.9% and Sprint is hanging on to many of its former Nextel customers as the company decommissions that network, reports CNBC’s David Faber.  (2 minutes)

“Somehow in the last 100 years, every time there is a problem of getting more spectrum, there is a technology that comes along that solves that problem. Every two and a half years, every spectrum crisis has gotten solved, and that’s going to keep happening. We already know today what the solutions are for the next 50 years.” — Martin Cooper, inventor of the portable cell phone

Despite the fear-mongering by North America’s wireless phone companies that a spectrum crisis is at hand — one that threatens the viability of wireless communications across the continent, some of the most prominent industry veterans dispute the public policy agenda of phone companies like AT&T, Verizon, Bell, and Rogers.

Martin Cooper ought to know.  He invented the portable cell phone, and remains involved in the wireless industry today.  Cooper shrugs off cries of spectrum shortages as a problem well-managed by technological innovation.  In fact, he’s credited for Cooper’s Law: The ability to transmit different radio communications at one time and in the same place has grown with the same pace since Guglielmo Marconi’s first transmissions in 1895. The number of such communications being theoretically possible has doubled every 30 months, from then, for 104 years.

National Public Radio looks back at the earliest car phones, which weighed 80 pounds and operated with vacuum tubes. Innovation, improved technology, and lower pricing turned an invention for the rich and powerful into a device more than 300,000,000 North Americans own and use today. (April 2012) (3 minutes)
You must remain on this page to hear the clip, or you can download the clip and listen later.

A traditional car phone from the 1960s.

The earliest cell phones have been around since the 1940s.  St. Louis was the first city in the United States to get Mobile Telephone Service (MTS).  It worked on three analog radio channels and required an operator to make calls on the customer’s behalf. By 1964, direct dialing from car phones became possible with Improved Mobile Telephone Service (IMTS), which also increased the number of radio channels available for calls.

In the 1970s, popular television shows frequently showed high-flyers and private detectives with traditional looking phones installed in their cars.  But the service was obscenely expensive.  The equipment set customers back $2-4,000 or was leased for around $120 a month.  Local calls ran $0.70-1.20 per minute.  That was when a nice home was priced at $27,000, a new car was under $4,000, gas was $0.55/gallon, and a first run movie ticket was priced at $1.75.

With many cities maintaining fewer than a dozen radio channels for the service, only a handful of customers could make or receive calls at a time.  The first “spectrum crisis” arrived by the late 1970s, when car phones became the status symbol of the rich and powerful (the middle class had pagers). Customers found they couldn’t make or receive calls because the frequencies were all tied up.  Some cities even rationed service by maintaining waiting lists, not allowing new customers to have the technology until an existing one dropped their account.

Instead of demanding deregulation and warning of wireless doomsday, the wireless industry innovated its way out of the era of MTS altogether, switching instead to a “cellular” approach developed in part by the Bell System.

[flv width=”412″ height=”330″]http://www.phillipdampier.com/video/ATT Testing the First Public Cell Phone Network.flv[/flv]

In the 1970s, when the first cell phone “spectrum crisis” erupted, the Bell System innovated its way out the the dilemma without running to Congress demanding sweeping deregulation.  This documentary, produced by the Bell System, explores AMPS — analog cell phone service, and how it transformed Chicago’s mobile telephone landscape back in 1979.  (9 minutes)

“Arguing that the nation could run out of spectrum is like saying it was going to run out of a color.” David P. Reed, one of the original architects of the Internet

Instead of one caller tying up a single IMTS radio frequency capable of reaching across an entire city, the Bell System deployed lower-powered transmitters in a series of hexagonal “cells.”  Each cell only served callers within a much smaller geographic area.  As a customer traveled between cells, the system would hand the call off to the next cell in turn and so on — all transparently to the caller.  Because of the reduced coverage area, cell towers in a city could operate on the same frequencies without creating interference problems, opening up the system to many more customers and more calls.

Inventor Martin Cooper holds one of the first portable mobile phones

In Chicago, Bell’s IMTS system only supported around a dozen callers at the same time. In 1977, the phone company built a test cellular network it dubbed “AMPS,” for Advanced Mobile Phone System.  AMPS technology was familiar to many early cell phone users.  It was more popularly known as “analog” service, and while it could still only handle one conversation at a time on each frequency, the system supported better call handling and many more users than earlier wireless phone technology.  By 1979, Bell had 1,300 customers using their test system in Chicago.

AMPS considerably eased the “spectrum crunch” earlier systems found challenging, and subsequent upgrades to digital technology dramatically increased the number of calls each tower could handle and allowed providers to slash pricing, which fueled the spectacular growth of the wireless marketplace.

Yesterday it was voice call congestion, today it is a “tidal wave” of wireless data.  But inventors like Cooper believe the solution is the same: engineering innovation.

“Somehow in the last 100 years, every time there is a problem of getting more spectrum, there is a technology that comes along that solves that problem,” Cooper told the New York Times. “Every two and a half years, every spectrum crisis has gotten solved, and that’s going to keep happening. We already know today what the solutions are for the next 50 years.”

Cooper believes in the cellular approach to wireless communications.  Dividing up today’s geographic cells into even smaller cells could vastly expand network capacity just like AMPS did for Windy City residents in the late 1970s. Using especially directional antennas focused on different service areas, placing new cell towers, innovating further with tiny neighborhood antennas mounted on telephone poles, or building out Wi-Fi networks can all manage the data capacity “crisis” says Cooper.

New technology also allows cell signals to co-exist, even on the same or adjacent frequencies, without creating interference problems. All it takes is a willingness to invest in the technology and deploy it across signal-congested urban areas.

Unfortunately, network engineers are not often responsible for the business decisions or public policy agendas of the nation’s largest wireless companies who are using the “spectrum crisis” to argue for increased deregulation and demanding additional radio spectrum which, in some cases, could be locked up by companies to make sure nobody else can use them.

[flv width=”600″ height=”358″]http://www.phillipdampier.com/video/NY Times Mobile Carriers Warn of Spectrum Crisis.flv[/flv]

The New York Times offers this easy-to-follow primer on wireless spectrum and why it matters (or not) in the current climate of explosive growth in mobile data traffic.  (3 minutes)

“Their primary interest is not necessarily in making spectrum available, or in making wireless performance better. They want to make money.” — David S. Isenberg, veteran researcher, AT&T Labs

Innovation, not wholesale deregulation, allowed the Bell System to solve the spectrum crisis of the 1970s by creating today's "cell system" that can re-use radio frequencies in adjacent areas to handle more wireless traffic.

Spectrum auctions bring billions to federal coffers, but actually deliver a hidden tax to cell phone customers who ultimately pay for the winning bids priced into their monthly bills.  It also makes it prohibitively expensive for a new player to enter the market.  Already facing enormous network construction costs, any new entrant would then face the crushing prospect of outbidding AT&T, Verizon Wireless, Bell or Rogers for the frequencies essential for operation.

As the New York Times writes:

When a company gets the license for a band of radio waves, it has the exclusive rights to use it. Once a company owns it, competitors can’t have it.

Mr. Reed said the carriers haven’t advocated for the newer technologies because they want to retain their monopolies.

Cooper advocates a new regulatory approach at the Federal Communications Commission — one that mandates wireless phone companies start using today’s technology to amplify their networks.

Cooper points to one example: the smart antenna.

Smart antennas direct cell towers to focus their transmission energy towards the specific devices connected to it.  If a customer was using their phone from the southern end of the cell tower’s coverage area, why direct signal energy to the north, where it gets wasted?  New LTE networks support smart antenna technology, but carriers have generally avoided investing in upgrading towers to support the new technology, expected to be commonplace inside new wireless devices within two years.

T-Mobile calls these technology solutions “Band-Aids” that won’t address the company’s demand for more frequencies to manage its network.  But that kind of thinking applied to the mobile phone world of the 1970s would have maintained the exorbitantly expensive IMTS technology discarded decades ago, since replaced by innovation that made more efficient use of the spectrum already on hand.  That innovation also transformed wireless phones from a tool (or toy) for the very wealthy to an affordable success story that now threatens the traditional wired phone network in ways the Bell System could have never envisioned.

[flv width=”412″ height=”330″]http://www.phillipdampier.com/video/Its a Whole New System.flv[/flv]

It’s A Whole New System: AT&T and other wireless phone companies might want to learn the lesson the Bell System was trying to teach their employees back in 1979: Meet Change With Change.  This company-produced video implores the phone company to do more than the same old thing.  No, this video is not “PM Magazine.”  It is about innovation and actually listening to what customers want. With apologies to Mama Cass Elliot, there was indeed a New World Coming — the breakup of the Bell System just five years later.  Don’t miss the diabetic-coma-inducing, sugary-sweet jingle at the end.  Then reach for a can of Tab.  (10 minutes)

(Courtesy: The Consumerist)

Comcast Cable subscribers in Colorado Springs got more than a bowl of Froot Loops Thursday morning when local ABC affiliate KRDO was suddenly replaced with hardcore adult pornography during an airing of Good Morning America.

Viewers were outraged by the risque replacement, which most assumed was the fault of the TV station.

“I’ve been on the phone already this morning after the porn that was broadcast while my daughter was eating breakfast,” wrote one angry viewer or KRDO’s Facebook page. “I’m outraged! Sick!”

The problems started just after 4 in the morning when Comcast technicians set off a series of cascading failures that ended up disrupting several broadcast TV signals on the cable dial throughout southern Colorado.  But amidst snowy pictures, technical difficulty slides, and test patterns, the appearance of XXX-rated programming for several minutes during ABC-TV’s popular morning news show caused some chaos at KRDO studios when the phones started ringing.

Station officials could do nothing but watch the parade of adult entertainment on their studio monitors.  Since the problem was at the cable company, only Comcast subscribers coped with the mishap.

“We are aware that Comcast is not airing our programming right now,” KRDO posted on its Facebook page early Thursday morning. “It’s an issue with Comcast. We are working on getting it fixed.”

Later Thursday, visibly upset station management appeared on the evening local news to apologize for the error.  Comcast later admitted responsibility for the technical snafu:

We sincerely apologize for the programming interruption on KRDO News Channel 13 (ABC) in Colorado Springs and Pueblo. In the process of correcting a technical system issue, a series of channels were inadvertently shown live on KRDO during the morning programming. The issue was a result of human error which has been resolved and preventative measures have been taken to avoid this from happening in the future.

[flv width=”480″ height=”290″]http://www.phillipdampier.com/video/KRDO Colorado Springs Comcast Channel Switcheroo 4-12-12.mp4[/flv]

KRDO in Colorado Springs found its regular airing of Good Morning America replaced with hardcore pornography on Comcast Cable.  (2 minutes)

The home of Atlantic Canada’s largest hot air balloon festival is getting more than hot air from broadband providers promising better broadband in New Brunswick.  Bell Aliant announced this month it will spend $2 million to expand its FibreOp fiber to the home service to 3,000 homes and businesses in the town of Sussex.

“Access to the FibreOP network represents a tremendous growth opportunity for Sussex, and has huge potential to connect businesses and families,” said Andre LeBlanc, vice president of Residential Products for Bell Aliant. “We are excited to continue our expansion in New Brunswick, and to offer the best TV and Internet to our customers in the Sussex area.”

Bell Aliant’s FibreOp delivers broadband speeds up to 250/30Mbps and is marketed without data caps — a rarity from large providers in Canada.

The company was the first in Canada to cover an entire city with fiber-to-the-home and by the end of 2012, will have invested approximately half a billion dollars to extend it to approximately 650,000 homes and businesses in its territory. FibreOP builds are complete in Greater Saint John including Quispamsis, Rothesay, Grand Bay/Westfield, as well as Bathurst, Fredericton, Miramichi, and Moncton, including Riverview, Dieppe and Shediac. Customers in parts of Nova Scotia, Prince Edward Island, and Newfoundland & Labrador also enjoy fiber to the home service.

While Bell Canada owns a controlling stake in Bell Aliant, it allows the Atlantic Canada phone company to operate under its own branding and supports their aggressive fiber upgrade project across the relatively rural eastern provinces.  Even more remarkably, while Bell is one of Canada’s strongest proponents for usage-based billing and caps on broadband usage by its customers, Bell Aliant competes with cable operators by advertising the fact it delivers unlimited, flat rate service.  Bell Aliant is aggressively expanding fiber to the home service in Atlantic Canada while Bell relies on its less-advanced fiber to the neighborhood service Fibe TV in more populated and prosperous cities in Ontario and Quebec.

That is counter-intuitive to other providers who eschew fiber upgrades in rural communities, suggesting the cost to wire smaller towns is too high for the proportionately lower number of potential customers.  That does not seem to bother Bell Aliant, who considers fiber to the home its best weapon to confront landline cord-cutters.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/What is FibreOP.flv[/flv]

Bell Aliant introduces Atlantic Canada to its FibreOp fiber to the home service, delivering unlimited fiber-fast broadband.  No Internet Overcharging schemes here.  (2 minutes)

Bright House Networks charges a $20 “collection processing fee” when the cable operator calls customers to remind them they have a past due balance. The fee, charged in addition to the company’s traditional “late charge,” has some Bright House customers upset.

The cable company explains the $20 “collection fee” is levied when a customer is two months past due and represents the costs of contacting the customer and “paperwork” inside Bright House’s offices.  But some customers consider it gouging, especially because they already pay a late fee.

Bright House Networks’ Residential Services Agreement implies a “collection fee” may only be charged when the company dispatches a representative to your home to request/collect payment for a past due amount (underlining ours):

If my Services account is past due and BHN sends a collector to my premises, a field collection fee may be charged. The current field collection fee is on the price list or can be provided on request. I will also be responsible for all other expenses (including reasonable attorneys’ fees and costs) incurred by BHN in collecting any amounts due under this Agreement and not paid by me.

Bright House charges a $20 "Collection Processing Fee" when it calls past due customers.

It also appears the “collection fee” has been a part of the Bright House experience since at least 2009.  We found one customer from Ocoee, Fla. complaining Bright House was charging a $20 “collection fee” for cable service billed at less than $21 a month.

If you have been charged both past-due and collection fees by Bright House, ask them to waive the fees.  We found several customers who successfully requested the company forgive one or both charges when an account is brought up to date.

Customers having trouble paying Bright House should consider dropping services to lower the bill or negotiate for a retention deal.  Customers threatening to switch to the competition are often able to secure a substantially lower price for service.

Bright House’s reasons for charging the $20 fee seem dubious to us, unless the company actually dispatches an employee to a customer’s home to seek payment.  But then we’d find it difficult to recommend any company that would send an employee to visit a customer’s home demanding money.  Cutting off service to deadbeat customers is often effective enough to prompt a payment arrangement.

[flv width=”360″ height=”290″]http://www.phillipdampier.com/video/WOFL Orlando BrightHouse Late Fees 4-12-12.mp4[/flv]

WOFL in Orlando covers the case of one late-paying Seminole County man who is annoyed Bright House charges him $20 to let him know he is past due.  (2 minutes)

[Updated 3:59pm ET 4/19 — A Bright House representative reached out to emphasize the cable company charges a $20 collection fee only after not receiving payment for two months.  A collections agent is physically sent to the address to give notice of possible termination and at that time a collections fee is billed.  The company denies it bills this fee when calling customers to inquire about a payment.  This seems in keeping with the company’s residential customer agreement, quoted above.  We appreciate the additional information and are happy to pass it on to our readers.]