September 26, 2005

Leap Wireless International's service expansion continues, as the carrier announced plans to launch high-speed wireless data capabilities and WAP-based browsing.

The carrier also plans to loosen the rein on its Jump prepaid service to better target the youth demographic.

Leap's high-speed wireless data plans are centered around the deployment of CDMA2000 1x EV-DO capabilities across its network beginning next year.

The carrier offers service in 37 markets and said it expects to install EV-DO capabilities in new markets using spectrum it won during the Federal Communications Commission Auction 58 earlier this year.

Leap acquired 10 megahertz of spectrum in 13 markets covering 20 million potential customers for $235 million during the auction.

Leap said it expects to build out the new markets and upgrade its existing markets to EV-DO technology for less than $475 million.

Unlike its larger competitors, which either already have launched or are planning to launch EV-DO services, Leap said its service will cater more toward handset usage instead of PC cards that are popular with enterprise customers.

"We think it will be primarily a handset play with streaming content and music services that are of interest to our core market segments," explained Al Moschner, chief marketing officer at Leap.

"But we are also looking at PC cards for a small percentage of our customer base."

One potential problem for Leap could be its relatively modest spectrum position in many markets.

The carrier controls between 25 megahertz and 30 megahertz in 18 of its markets, but only between 10 megahertz and 15 megahertz of spectrum in the rest.

While the carrier has made the most of the spectral efficiency of its CDMA-based network, analysts note that Leap has to deal with an average of 1,500 calling minutes per month per customer, which is more than twice the industry average.

Carriers traditionally have carved out 5-megahertz chunks of spectrum to support their initial EV-DO launches, which would leave Leap precious little additional capacity to handle an increase in voice traffic or customers, or require the company to invest additional funds to upgrade network capacity.

Moschner admitted that the carrier is not as spectrally rich as other EV-DO carriers, but said the company is confident it can support the launch.

Moschner added that the carrier also is looking at acquiring additional spectrum if necessary and that Leap's focus on handset-based mobile applications would not require the depth of network assets as more data-intensive enterprise applications.

"Tier 1 carriers are burning a lot of spectrum with data applications," Moschner said. "We will be more mobile centric with applications designed for the handset in mind."

Source: RCR News