Sprint to Axe QChat

Sprint Nextel (S - Analyst Report) is reportedly discontinuing using Qualcomm’s (QCOM - Analyst Report) QChat technology that enables push-to-talk walkie-talkie services on Sprint-branded phones. The third-largest US wireless carrier will stop offering any new devices and services based on this technology. Sprint is currently in the process of phasing out QChat-based handsets. However, the company will continue to support existing customers using push-to-talk phones based on QChat.

Sprint introduced QChat devices in 2008 on its CDMA EV-DO Rev A technology based wireless network. The company has been operating this service parallel to the instant push-to-talk walkie-talkie service offered through Nextel’s iDEN wireless network. Sprint acquired the iDEN network through its acquisition of Nextel in August 2005.

However, since the acquisition of the iDEN network, Sprint is struggling with subscriber retention issues. The company has hemorrhaged subscribers (over 4 million subscribers lost in 2008 and 3 million lost in the first nine months of 2009) due to problems associated with integrating its two incompatible CDMA and iDEN wireless networks.

Over the years, Sprint has made considerable capital outlay to unify its own CDMA network with the iDEN platform. However, this phase-out has prompted many of its subscribers to switch to other carriers, primarily to larger peers such as Verizon (VZ - Analyst Report) and AT&T (T - Analyst Report).

Sprint aimed to leverage the QChat technology as a potential replacement for the Nextel’s iDEN technology-based push-to-talk service. The company targeted to gradually migrate the customers using Nextel’s push-to-talk devices and services to the QChat platform (runs on the superior EV-DO technology) to contain subscriber churn. However, QChat failed to meet the initial high expectations, in part due the presence of competitive service offerings and some technical glitches.

Sprint announced in September 2008 that it will keep the iDEN network despite the drag it had made on the carrier's business. The company is currently in the process of rejuvenating the iDEN network. As part of this strategy, Sprint has strengthened its relationship with Motorola (MOT) to provide enhanced network capacity and greater functionality to facilitate the roll-out of advanced iDEN devices and services.

By discontinuing QChat, Sprint plans to concentrate on the revival of its iDEN push-to-talk business. The company has argued that the network’s technical performance has improved in the recent times. This has prompted Sprint to extend the high-growth Boost Mobile prepaid brand to the iDEN network platform. However, it remains to be seen whether the company’s decision to jettison QChat for the sake of the struggling iDEN network eventually turns out to be fruitful.

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