A Foolish Week of Telecom

The waiting for results of Sprint Nextel's (NYSE: S  ) first quarter with the iPhone was finally over this week. The good news: Forty percent of the 1.8 million iPhone subscribers were new to Sprint. Bad news: Because of the subsidies it had to eat on each of those iPhones, Sprint's operating margin decreased with each phone sold. At least AT&T and Verizon were affected the same way.

Sprint ended up with a quarterly loss of $1.3 billion, bringing its total red ink for the year to $2.9 billion.

Sprint also announced this week it is finally going to get rid of the iDEN push-to-talk millstone of a network it acquired when it took over Nextel in its ill-advised merger back in 2004. Sprint CEO Dan Hesse told CNET, "It's a big cost drain on the company to run two networks." Giving credit where credit is due, Hesse does not deserve the infamy of authoring that deal; former CEO Gary Forsee had that honor.

Coinstar Galactica
Verizon and Coinstar's Redbox DVD rental division have formed a partnership to provide video streaming services over the Internet. The venture will be split 65/35, with Verizon owning the lion's share. This venture will be competing with Netflix's (Nasdaq: NFLX  ) video streaming business, as well as Amazon.com's and others. We'll have to wait for more details on this.

More RIM woes
AppleInsider reported that an internal Halliburton memo circulated among its employees says the company will be "transitioning from the BlackBerry (RIM) platform that we currently use to smartphone technology via the iPhone." A spokeswoman for the large energy services company told AppleInsider that "Approximately 4,500 Halliburton employees currently have BlackBerrys. We are making this transition in order to better support our mobile applications initiatives."

This news comes at a time when Research In Motion (Nasdaq: RIMM  ) is trying mightily to encourage app development for the BlackBerry. Hoping to entice more app developers to come on over to the BlackBerry world, a RIM executive told a developers' conference in Amsterdam that BlackBerry apps create 40% more revenue for their creators than do Android apps.

LightSquared's hopes darken
The Deputy Secretary for the U.S. Department of Transportation, John D. Porcari, was in front of the House Committee on Transportation and Infrastructure this week asking for standards to be introduced that would remove the possibility of wireless interference with GPS devices. Specifically in regard to LightSquared's proposed satellite/ground station 4G LTE network, Porcari told the committee that some of the LightSquared systems emissions were so powerful that they effectively blocked GPS signals, causing "overload interference."

The upshot is that the cellular network LightSquared proposes cannot be made compatible with GPS, Porcari told the House Aviation Subcommittee.

LightSquared, though, has a solution. It has asked the Federal Communications Commission to put the onus of removing wireless interference on the GPS manufacturers. The company says GPS receivers should be regulated to make sure they are not affected by stray emissions. That may be a tough sell.

Like a you-know-what
Virgin Media, the U.K. cable company, has produced an annual profit for the very first time, earning $120 million in 2011. This came on a 3% increase in annual revenues. Virgin Media is the first non-U.S. company to get an exclusive licensing deal with TiVo (Nasdaq: TIVO  ) to use its on-demand content.

Another first timer
Alcatel-Lucent
(NYSE: ALU  ) also managed a profit for the first time since Alcatel merged with Lucent six years ago. The long road to profitability was filled with potholes produced by the worldwide economic malaise and tight competition from Chinese equipment manufacturers such as ZTE and Huawei. European rivals Nokia Siemens Networks and Ericsson have taken their hits, with NSN announcing plans to lay off 25% of its workers and Ericsson having reported a drop in quarterly profits as U.S. carriers have gotten a bit tighter with a buck.

Last but not least
What would a Foolish Week of Telecom be without some spectrum news? Executives from Sprint, T-Mobile, and LEAP Wireless wrote to influential members of Congress this week that it should not take away from the FCC the authority to oversee spectrum auctions.

"Stripping the FCC of its auction design discretion would disserve the public interest by permitting unchecked participation by the two largest, best-funded wireless carriers in future spectrum auctions," the carriers wrote.

Of course, the two largest carriers referred to are AT&T and Verizon. AT&T, through a statement from its senior VP of external and legislative affairs, Jim Cicconi, said the small carriers want the regulatory agency "to stack the deck in [their] favor ... These companies should be prepared to compete in a fair and open auction, and should stop seeking a rigged spectrum auction."

And so it goes...

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Fool contributor Dan Radovsky owns shares of AT&T. The Motley Fool owns shares of Intel. Motley Fool newsletter services have recommended buying shares of Netflix, Intel, and Coinstar. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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