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Sprint CEO at CTIA: 4G is tipping point for mobile video

LAS VEGAS - During his keynote address, Dan Hesse, CEO of Sprint Nextel Corp., discussed the benefits of 4G technology and said that once it is the standard, mobile video distribution will explode.

Mr. Hesse was interviewed by master of ceremonies Steve Largent, president/CEO of CTIA-The Wireless Association. The keynote came one day after Sprint unveiled the HTC EVO, the first dual-mode 3G/4G Android-based smartphone that serves as a mobile WiFi hotspot and features YouTube HQ (high quality).

?With 3G you can email and surf the Internet, but now you have mobile entertainment demands and 3G is getting exhausted?it?s like Scotty [from Star Trek] in the engine room??She?s going as fast as she can,?? Mr. Hesse said. ?If you take a look at where the growth is in the industry, it?s data usage, which will continue to increase, and of all data applications, video content will grow the fastest at around 130 percent a year.

?With 4G truly being multimedia, it?s really about video distribution, and cable companies are realizing they have to move into wireless?their core business is video distribution,? he said. ?Do you want them for you or against you?

?We share competitors, so get them into our ecosystem in terms of WiMax 4G and adding that to our platform was huge.?

With the advent of 4G, the discussion around rate plans will move from how many minutes per month to how many gigabytes of data, according to Mr. Hesse. Mobile video uses more data than any other application.

And while high-quality mobile video has obvious implications for entertainment, there are many still-untapped uses for various enterprise sectors.

While carriers tend to focus primarily on consumers, Mr. Hesse said that the business segment is also very important and generates a lot of revenue.

?If you take a look at the verticals, different business segments that will be affected by 4G, particularly the video element will make a big difference,? Mr. Hesse said. ?4G because of its video capabilities will revolutionize healthcare.

?4G is changing healthcare in America, and itt?s a huge opportunity for our industry to do some good,? he said. ?It?s a huge industry, and healthcare currently spends 2 to3 percent on IT as opposed to 6 to 8 for the market in general, but we expect healthcare spending on wireless to increase 44 percent each year over the next several years.

?The number of medical applications coming on board is really staggering.?

The keynote also covered Sprint?s reasoning for going with Clearwire?s WiMax to power its 4G network as opposed to LTE, which most other carriers chose.

?We had the choice, and WiMax was the tried-and-true, tested, working 4G technology with an existing ecosystem,? Mr. Hesse said. ?I will be frank, most likely LTE will be the bigger of the two standards, but we couldn?t wait.

?We have enough spectrum that we could always add other technologies later, and time to market was very important?it?s a competitive advantage for us,? he said. ?4G is more efficient, and if gigabytes become the biggest factor of rate plans, that also gives us an advantage in terms of cost.?

Deutsche Telecom
Mr. Hesse was followed by an archrival, Rene Obermann, CEO of Deutsche Telecom AG, Bonn, Germany, the largest telecommunications company in Europe and parent of T-Mobile USA, the No. 4 carrier in the U.S. based on number of subscribers.

Mr. Obermann said that there are similar challenges but multiple differences between Europe and the U.S.

The U.S. market has seen strong mobile data growth, which grew 29 percent last year, whereas in Europe it grew by 11 percent.

The increase in data traffic will further accelerate, according to Cisco, with a projected compound annual growth rate (CAGR) of 131 percent from 2008 to 2013, multiplying sixty times over that period.

Non-voice ARPUs have become much bigger in the U.S.?$15 per month versus less than $10 in Europe.

?U.S. is becoming the driver of mobile data and becoming bigger than Europe in that area,? Mr. Obermann said. ?It used to be about subscriber growth, now it?s about loyalty and ARPU.?

Mr. Obermann said the wireless industry is creating the basis for the explosion of mobile Internet traffic growth with vast investments totaling $19 billion this year, 80 percent of that for mobile broadband infrastructure.

?How can these investments be sustained?? Mr. Obermann said. ?In terms of regulation, the difference between the U.S. and Europe is significant, and telecommunication investment per capita, with the exception of Switzerland, is higher in the U.S. than in Europe.

?Europe has regulated the wireless industry heavily but the picture in the U.S. is quite different,? he said. ?It?s a relatively regulatory-free environment, and I?m optimistic American policy-makers will want to continue this trend to ensure growth and investment going forward.

?I welcome the announcement of the FCC to open up further spectrum for mobile broadband services in the U.S., which will encourage further investments?however, the timing is very critical, and given the growth curve the U.S. should move very quickly to open up more spectrum.?