Sprint Spectrum L.P. announced today that it has signed a three-year agreement valued at nearly $500 million with Qualcomm Personal Electronics to purchase Code Division Multiple Access(CDMA) portable phones for its nationwide digital Personal Communications Services (PCS) network. This is the largest agreement to date for purchase of CDMA handsets.
The agreement calls for initial deliveries of Qualcomm Personal Electronics' new CDMA digital handset in July 1996. Qualcomm Personal Electronics, a joint venture of Qualcomm Inc. (NASDAQ:QCOM), and Sony Electronics Inc., will manufacture state-of-the-art CDMA handsets in support of Sprint Spectrum's new all-digital PCS network, which is now under construction.
Sprint Spectrum's national digital wireless communications network will offer service in 32 Major Trading Areas (MTAs) with a population of 182.5 million. The company's service area makes it potentially the largest wireless communications company in the country. The company plans to launch commercial service in certain MTAs by year-end 1996 with the remaining launches expected in the first quarter of 1997.
The new PCS phones will be distributed through Sprint Spectrum retail stores, which the company plans to open around the country, as well as through major retail and electronics stores and direct sales channels. In addition, the company's parents—Sprint Corporation, Tele-Communications Inc. (TCI), Cox Enterprises and Comcast Corporation—will market the phones to their existing 36 million customers.
"This is a very significant step for Sprint Spectrum as we move toward launch of our national PCS network later this year," said Bernie Bianchino, chief business development officer for Sprint Spectrum. "We are very pleased to conclude this agreement with Sony and Qualcomm. Sony's strength in consumer electronics and Qualcomm's leadership in CDMA technology should ensure on-time deliveries of quality handsets which meet our demanding specifications.
"Based on current forecasts, this agreement is expected to give us the inventory we need to launch our service in the timeframe we have projected. We have worked closely with Sony and Qualcomm in defining the product requirements for the handsets. The result is a compelling product offering combining advanced handset features with the unique capabilities of the Sprint Spectrum network. We also are negotiating agreements with other suppliers for additional CDMA handsets."
Dr. Irwin M. Jacobs, chairman and chief executive officer of Qualcomm said, "We are pleased to supply Sprint Spectrum with the PCS phones they need to demonstrate their ongoing commitment to providing the best possible service to their wireless customers. CDMA technology will help fulfill Sprint Spectrum's promise of improved voice clarity and a full array of features in a single handset."
Carl Yankowski, president and chief operating officer of Sony Electronics, Inc. said, "Sprint Spectrum's decision reflects their commitment to redefining how consumers and businesses will realize the promise of wireless communication. We look forward to supporting Sprint Spectrum with the products they need to rapidly bring the benefits of CDMA to their customers nationwide."
The CDMA portable phones are codeveloped by Qualcomm and Sony and are manufactured by Qualcomm Personal Electronics. The Qualcomm QCP-1900 and the Sony CM-D600 PCS phones use CDMA technology, developed by Qualcomm, and Sony's Lithium Ion battery technology, and are expected to deliver extended talk and standby time over today's analog cellular technology. Standard features of the phone will include voice mail, incoming caller ID and short messaging service. Callers are easily guided through the phone's operations through a user-friendly interface and soft-key menu. The phone's four-line liquid crystal display (LCD) uses icons to indicate signal strength, battery status, transmission mode, roaming status and other functions.
CDMA also offers enhanced call clarity, quality and security. Sprint Spectrum's digital CDMA network is expected to reduce eavesdropping concerns that traditional cellular users have today and offer improved fraud protection. In addition to the standard features of this state-of-the-art handset, Sprint Spectrum is developing enhanced, customized features which are expected to be available around the time of service launch.
Based in San Diego, Calif., Qualcomm Personal Electronics is a joint venture of subsidiaries of Qualcomm Incorporated and Sony Electronics. Qualcomm Personal Electronics, which manufactures CDMA portable phones for cellular and personal communications services (PCS) applications, leverages both companies' product, technology and manufacturing expertise. The phones are marketed and sold in North America through Sony/Qualcomm CDMA Sales, a division of Qualcomm Personal Electronics, and throughout the world by Qualcomm and Sony.
Sprint Spectrum is owned 40 percent by Sprint Corporation, 30 percent by TCI and 15 percent each by Comcast Corporation and Cox Communications. Sprint Spectrum will directly serve most of the major metropolitan areas of the U.S., and customers will be able to use their phones in other areas of the country through agreements with other PCS service providers.
Sprint Spectrum, through its affiliate American Personal Communications, launched the country's first PCS service in November 1995 in the Washington D.C./Baltimore area. Response to the service has exceeded expectations with more than 80,000 subscribers using the service just six months after launch.
Except for the historical information contained herein, this news release contains forward-looking statements that are subject to risks and uncertainties, including timely product development, change in economic conditions of the various markets that Qualcomm serves, as well as the other risks detailed from time to time in Qualcomm's SEC reports, including the report of Form 10-K for the year ended September 24, 1995 and most recent Form 10-Qs.