Sprint dumping iDEN might be a good thing

Ever since Sprint purchased Nextel back in 2005, Nextel’s iDEN push-to-talk business has taken a nose dive. Customers, including public-safety users, have defected at an alarming rate as Sprint chose to focus more heavily on the consumer CDMA market than the iDEN side of the house, despite the fact that the business historically generated the best revenues in the industry.

Now, after three years of limping along, Sprint finally is ready to sell off the business. This comes after the carrier’s a big comeback campaign for iDEN at the beginning of 2008 that included a healthy investment in the network to improve quality and a roll-out of high-speed CDMA technology—known as EV-DO Rev. A—to support a CDMA P2T product using VoIP technology. Sprint is looking to dump the network because customers are still churning from iDEN at a rapid rate. At the end of the second quarter, Sprint had 14.6 million iDEN subscribers, down from 17.3 million at the end of the first quarter, despite the fact that Sprint CEO Dan Hesse had declared that the network was performing at the “best levels ever.”

So now it appears that some private equity firms, along with NII Holdings—which operates iDEN networks in Latin America—may be looking to acquire Sprint’s iDEN arm. This may be exactly what public-safety needs—a company that is solely focused on meeting the needs of P2T users and loyal public-safety users. Sprint clearly doesn’t have the resources to woo these valuable customers back, and Nextel already has proved that a business case based solely on the P2T proposition is a sound one.

iDEN has proved to be a vital communications tool for many first responders around the country. For example, in Charlottesville, Va., iDEN is used as a parallel network for daily operational functions and is integrated with the county’s 800 MHz system in a manner that allows emergency personnel using the iDEN service to talk directly with other public-safety personnel as if they were on a portable radio.

Let’s just hope it isn’t too late for the iDEN network. With the credit crunch, Sprint acknowledges a tough road for any potential buyer trying to raise the capital to buy the iDEN business, especially given the fact that Sprint is looking for a buyer to assume at least $5.4 billion in debt. Moreover, Sprint has spent a significant amount of effort combining its two incompatible CDMA and iDEN networks, launching dual-mode phones and combining operations on the backend. Any sale would involve some difficult splitting of the two networks or some sort of lease agreement with the new owner.

If Sprint doesn’t consummate a sale, the operator has indicated that the company has some other unnamed options. Perhaps the federal government could step in as a buyer. It certainly is on a buying spree these days. What’s a few more billion anyway?