Sprint Nextel Corp. on Monday launched a downloadable music service, the first to deliver songs over a U.S. cellular network, as it tries to keep pace in a wireless arms race increasingly dominated by mobile Internet services.
The Sprint Music Store is being launched in tandem with the rollout of a speedier wireless technology that Sprint is rushing to deploy in competition with broadband offerings from Verizon Wireless and Cingular Wireless. The new service is not available to the company's Nextel subscribers, who are served by a slower network.
Sprint is charging $2.50 per song for two copies of each track: one to play on a phone and one for a personal computer. That's much pricier than the typical 99-cent price charged by Apple Computer Inc.'s wildly popular iTunes and other music stores, though none of those feature the potential convenience and spontaneity of not needing a computer to buy music and download it to a mobile device.
The cell phone industry is eyeing mobile music as a new source of revenue, though it's unclear whether users will want to buy music through their wireless operators.
Sprint Nextel's announcement comes more than a month after Cingular Wireless LLC introduced the ROKR, the first cell phone that can play music downloaded to a computer from iTunes. So far, sales of The Motorola Inc. phone have been disappointing.
The Sprint music store is initially accessible on two new handsets made by Samsung and Sanyo. The phones can each hold up to 1,000 songs with an optional 1-gigabyte memory card, 10 times the capacity of the ROKR.
However, Sprint's selection of songs is somewhat limited, offering about 250,000 titles from EMI Music, Sony BMG Music Entertainment, Warner Music Group and Universal Music Group, while iTunes offers 2 million tracks. A Sprint Nextel spokeswoman said the number of songs will continue to increase.
Avi Greengart, an industry analyst for Sterling, Va.-based Current Analysis, said many services the companies offer to wireless Internet users have yet to be widely embraced.
"The music store is one of those 'throw it at the wall and see if it sticks' ideas," Greengart said, adding, "(Sprint Nextel) can't let Verizon take and hold a lead in terms of video and music. If Sprint waited on the sidelines too long, they could lose what makes them unique."
Monday's news comes as Sprint Nextel, based in Reston, Va., with operational headquarters in Overland Park, Kan., rolls out a speedier wireless service it says will compete nationwide with industry leader Verizon Wireless by early next year.
Currently, Sprint Nextel's Power Vision network is offered in pockets of about 127 markets. By early next year, the company said it plans to offer the service, which uses EV-DO technology, all across 220 markets.
Verizon Wireless, a joint venture of Verizon Communications Inc. and Vodafone Group PLC, began offering its version of EV-DO about two years ago in San Diego and Washington, D.C. The network now covers 171 metropolitan areas, a substantial jump start in what's rapidly becoming the most important growth sector in the wireless industry. Verizon, like most carriers, also sells a number of phones with built-in MP3 music players to listen to music downloaded to a computer from the Internet or ripped from a CD.
EV-DO and the competing UMTS technology being introduced by Cingular, a joint venture of SBC Communications Inc. and BellSouth Corp., is billed as providing download speeds from 400 to 700 kilobits per second. That's on par with low-level DSL and cable broadband services, but far slower than Wi-Fi connections at many airports, coffee shops and book stores.
Despite the slower speeds, EV-DO and UMTS give users the ability to go online wherever there is a cellular signal. Wi-Fi signals are generally limited to a few hundred feet.
With price wars hurting margins on wireless voice calls and two-thirds of the U.S. population already signed up as customers, cell companies are banking on mobile Internet services for growth.
Last week, Verizon Wireless reported that mobile data services made up 8.4 percent of total revenue for the second quarter, up from 4.7 percent a year ago. Sprint Nextel reported last week that data generated an average of $5.25 per subscriber during the third quarter, 40 percent higher than one year ago.
Shares of Sprint rose 6 cents to $23.31 in Monday's trading on the New York Stock exchange.