RadioShack announced today that it plans to drop cell phone wireless operator Verizon in favor of a 10-year deal with Cingular Wireless and an 11-year renewal with Sprint PCS. RadioShack is the largest indirect distributor of wireless services in the United States, operating more than 7,000 retail outlets and 600 wireless kiosks.
The long-term agreement may have as much (or more) to do with money than technology. Cingular technically operates the largest wireless network in the US, but uses the GSM (Global Mobile Communications) protocol rather than the CDMA (Code Division Multiple Access) protocol utilized by Verizon. GSM is the de facto global standard for wireless service, and RadioShack is keen to point out the agreement with Cingular brings GSM technology into its fold while retaining support for existing CDMA service through Sprint.
However, as the U.S. market for cellular phones saturates and sales of new phones increasingly represent replacements rather than new customers, wireless carriers are eager to improve sales volumes via third-party distributors. RadioShack is the biggest of the bunch, adding thousands of retail outlets to Cingular’s reach, while simultaneously reducing Verizon’s sales presence. Despite the technology difference, it’s likely RadioShack was simply able to line up a more lucrative deal with Cingular than with Verizon.
By signing a new 11-year deal with Sprint, RadioShack will also gain access to Nextel wireless products, following Nextel’s pending merger with Sprint. RadioShack’s and Sprint’s previous agreement had a 10-year term.
Cingular products will become available through RadioShack in January 2006; Verizon products will be phased out by the end of 2005. Pending regulatory approval of the Nextel-Sprint merger, RadioShack anticipates NexTel products being available through RadioShack stores in the third quarter of 2005.
