What’s the future of push-to-talk (PTT)? That question is on the mind of
everyone connected to Sprint Nextel, but the best answers may be
comingfrom its partners and competitors.

The $35 billion acquisition of Nextel Communications and its millions of walkie-talkie service subscribers seemed like a smart move, if not somewhat overpriced, for Overland Park, Kan.-based Sprint when it was announced in December 2004.

But since then, the PTT craze has tempered somewhat except for industrial niches such as field workers and public safety. For the former Nextel customers, there have been glitches in merging the legacy iDEN network with Sprint’s current CDMA network. (See “Moral of Nextel Acquisition” on page 15.)

“The Nextel National Network is key to delivering Nextel Direct Connect. Sprint has invested significantly during the past two years and the network is performing at best-ever levels. Customers can expect to see continued investment,” said CEO and President Dan Hesse, in a January press statement. “Internal performance metrics show double-digit percent improvement year-over-year for drops and blocks. Customer issues related to dropped and blocked calls, and voice quality, have decreased more than 60% since December 2006,” the statement continued.

Finley: Sprint’s integration is a work in progress.

A more realistic assessment comes from Vice President and Integration Project Leader Mike Finley. “We haven’t done as good a job as we expected to and there are various reasons for that. When we came out of the merger, our network didn’t perform as well as we would have liked,” Finley says. “We’ve been developing this capability on the CDMA network for a long time… it even preceded the merger. This is not an easy thing to do,” he says.

Now the short-term question is the matter of launch timing for Sprint’s new PTT-over-CDMA service, using Qualcomm’s QChat technology. Sprint officials would only cite “the early part of 2008,” but industry sources expect the announcement to be made around CTIA’s Wireless 2008 show in Las Vegas.

QUALITY OF PTT
Regardless of the timing, Finley believes the PTT market is still “incredibly robust and there’s a huge opportunity.” The CDMA version’s quality-of-service issues are fixed, and the network will retain sub-second connection times to which iDEN users are accustomed, he says. He adds that the iDEN network itself will “initially” remain and will be useful for international calls and business applications. Officials at the time of the merger said the network will remain until 2010.

“We’re not going to force-migrate anybody. I’d support it as long as customers want it,” Finley says. Sprint also will consider new applications on both networks such as push-to-e-mail, voice mail, send pictures, find a location and engage in group communications.

If there are delays, they would be justified, Yankee Group analyst X.J. Wang says. “They want to make sure [PTT customers] are happy because they generate very good revenue,” he says. “It’s very dangerous to simply upgrade them without providing the same user experience. Sprint has the highest churn in the industry,” he adds.

Ross: Q-Chat’s development time lengthened to reduce latency and speed up connection times.

PUSH DEVELOPMENTS
PTT technology itself is the focus of plenty of research and development, some of which Sprint may look to emulate.

“QChat’s been under development for at least 10 years. We’ve been developing it with Nextel for maybe seven of those years,” explains Dave Ross, Qualcomm’s senior director of business development, and one of the original designers of QChat. “We went down a 1X CDMA path for a while and sort of midstream changed direction,” because it was too slow with 1.5-second connection times. Then, “We migrated the entire platform onto EV-DO so we could pick up 700ms. We packed on another 3 years to the development cycle.”

Ross says the future of QChat is Yagatta, a conceptual platform for advanced features and third-party software integration which could be ready for use in 12 to 18 months. Some of Sprint Nextel’s iDEN handsets already support third-party applications such as push-to-scan a barcode, but Yagatta programs could have features such as streaming media and large file transfers, because of CDMA’s 1.25 MHz bandwidth compared to iDEN’s more limited 35 KHz, he says.

Lawler: Kodiak is moving technology to OMA’s POC.

Similar plans exist elsewhere in the PTT landscape. Officials at Kodiak Networks, which supplies the PTT function for AT&T and Alltel, cite connection times, advanced message options and call waiting as some of their current differentiators versus Nextel’s iDEN system. By the end of 2009, Kodiak plans to move its technology onto the Open Mobile Alliance’s Push-to-Talk over Cellular (POC) 2.0 standard, which is not yet complete, Co-Founder and Executive Vice President Bruce Lawler says. Kodiak will offer a hybrid system that lets carriers offer the current network and the IP-based POC version, thereby creating different service tiers for customers to purchase, he says.

Another possible future for PTT is to eliminate the special network entirely. Clarity Communications Systems formed 10 years ago to develop mobile applications; it introduced its software-only PTT system, InTouch, early last year. The current version, InTouch 6.0, runs either at the customer premise or can be hosted by Clarity. It requires that phones support Qualcomm’s BREW software.

The Aurora, Ill., company is testing new client software for the U.S. Department of Homeland Security on Windows XP, so that users can push-to-talk directly from their PCs to other users’ handsets. The test version of InTouch is version 7.0; version 8.0 will use VoIP to interoperate with land mobile radio technology. Clarity also is involved in discussions with “a couple” of unspecified Tier 1 carriers, says Vice President of Product Management Bill Jenkins.

So how will push-to-talk shake out long-term with the variety of routes it could follow? Paul Golding, an industry consultant and author of the book Next-Generation Wireless Applications, believes PTT will eventually just blend into the list of standard mobile device features.

“I think it will continue to be a niche application. Eventually, we may see a greater switch as IMS gets more prevalent and as users have a buddy list on their handset, and that buddy list will support a number of services … then I think there will be a more fertile ground for push-to-x services.”

Moral of Nextel Acquisition: Buyer Beware

When Sprint merged with Nextel in 2005, the new company had its share of technical difficulties for the Direct Connect push-to-talk (PTT) network, such as interference with public safety networks. Bugs aside, PTT just isn’t as trendy as it used to be. “It certainly has gone down,” says Citigroup telecommunications analyst David Hamburger, in New York. Sprint-Nextel managed to alienate up to 800,000 customers per quarter since the merger, and currently only about 13.5 million of the 19 million Direct Connect customers are post-paid. “The U.S. government has become the largest customer on that network. My sense is…. as much as two-thirds of the remaining post-paid subscribers are the small and medium businesses,” he says. “It’s less of a discretionary expenditure than a normal customer would be.” It’s no wonder, then, that Sprint recently stated its intentions to write-off a significant amount of the original $35 billion merger cost, citing Nextel being over-valued. Where push-to-talk once seemed like it could become a mainstream trend, akin to social networking and instant messaging, Sprint’s handling of the merger backend did not help.