Sprint Nextel Corp. said it plans to give $100 pint-sized cell towers to some mobile-phone customers to improve coverage, a move that may put pressure on other competitors to follow suit.
“In certain situations, where you have really bad coverage in your home, we will give it to you as a retention tool,” Paget Alves, Sprint business markets group president, said. AT&T said it has given away the towers, known as femtocells, to some customers to test pricing models. Verizon Wireless said it doesn’t offer them for free.
A femtocell, about the size of a computer modem, acts like a mobile-phone tower, carrying a wireless signal inside a building for improved reception. Carriers may benefit from femtocells because the devices route calls through home Internet connections, relieving congestion on the companies’ networks.
“It’s a really effective way to offload traffic from the network,” said Craig Moffett, an analyst at Sanford C. Bernstein & Co. in New York. “One of the real puzzles is why carriers haven’t subsidized femtocells in larger quantities.”
Sprint, the third-largest U.S. mobile-phone carrier, and larger rivals AT&T and Verizon Wireless are seeking ways to add capacity as customers increasingly use mobile phones to surf the Web and watch video clips, boosting network traffic. AT&T, the exclusive U.S. carrier for Apple Inc.’s iPhone, has faced criticism for dropped calls since the first version of the device debuted three years ago.
Wireless carriers have tried selling femtocells for a few years, and less than one million units had been deployed worldwide as of last year, market researcher Berg Insight estimated.
Verizon Wireless’s Coverage Extender costs $249.99. Dallas-based AT&T’s 3G MicroCell costs $149.99, though the carrier has offered mail-in rebates in some states for limited time periods. Sprint’s Airave femtocell, currently priced at $99.99 with a plan, covers 5,000 square feet, according to the Overland Park-based carrier’s website. The carriers don’t disclose femtocell sales.
“Should we subsidize it because we are getting some value out of it? Yes, because it’s going to improve churn,” Alves said, referring to the percentage of customers defecting. “We’ve got to do something to make in-building coverage as good as outside.”
Other notable business news:
• Japan intervenes in currency market. Japan made a surprise foray into currency markets Wednesday to reverse the yen’s ascent, which has been bad for companies like Toyota and Sony that are critical to the country’s economy.
• Government: Banks should share Fannie, Freddie costs. The nation’s largest banks have an obligation to pay some of the cost for bailing out mortgage buyers Fannie Mae and Freddie Mac because they sold them bad mortgages, a government regulator said Wednesday. Edward DeMarco, the acting director for the Federal Housing Finance Agency, said the banks this summer have refused to take back $11 billion in bad loans.