By Michal Lev-Ram

When Sprint Nextel CEO Dan Hesse joined the wireless company last December, he inherited a backlog of problems. Among them: The logistical nightmare of managing two different networks formed by Sprint’s merger with Nextel, a high rate of subscriber defections and a bad (okay, horrible) reputation for customer service.

At his first conference call with analysts in February after Sprint (S) announced disappointing fourth-quarter earnings, Hesse himself admitted that “the issues we face are more difficult than what I had expected to find.”

But that didn’t stop the former AT&T (T) executive from quickly implementing some much-needed changes. Within five months, Hesse has cut costs by closing 8 percent of Sprint’s retail stores and laying off nearly 7% of the staff. He also made senior management changes, launched a new unlimited voice and data plan, and just this week inked a joint WiMax venture with Clearwire (CLWR) and a slew of high-profile investors.

Now, as Sprint prepares to release its first-quarter earnings results Monday, investors are looking to Hesse to see what he’ll do next to turn the wireless carrier around.

“So far the read on him is cautiously optimistic,” says RBC Capital Markets analyst Jonathan Atkin. “He’s taken prudent steps to evaluate what the issues are, and made progress on his checklist - including the critical item of how to move forward with WiMax.”

Sprint’s investment in WiMax - a next-generation network that promises faster speeds well-suited for data services like web browsing and music downloads - has been a main point of contention among investors. Under former chief executive Gary Forsee, the company poured about $5 billion into the technology, only to find its cutting-edge service bogged down by delays and an inability to seal a WiMax partnership with broadband Internet provider Clearwire.

But last Wednesday the two companies announced they had finally come to an agreement and would combine their wireless broadband operations to create a $14.55 billion venture. Intel (INTC), Google (GOOG) and a handful of other companies have agreed to invest $3.2 billion in the new company.

In an interview with Fortune earlier this week, Hesse said the upcoming WiMax service will give Sprint a “differentiating advantage.”

“This allows us to be the only company to offer 4G [fourth-generation network] services,” said Hesse. “WiMax as a technology is available now and it works now.”

Of course, it’s still not clear exactly when the new service will be available to Sprint customers, though the Clearwire joint venture is expected to close by year-end. Sprint rivals AT&T and Verizon (VZ) have said they are committing to a competing fourth-generation network technology called Long Term Evolution, or LTE, which is expected to become available around 2010.

With its increasingly narrower time-to-market advantage, WiMax is still far from a guaranteed success. And in the meantime, Hesse has his hands full trying to put out other fires.

Come Monday, investors will be looking for news regarding Sprint’s core business, selling voice and data services on its CDMA network, which has been bleeding customers. Subscribers have also been defecting from the iDEN network the company inherited when it merged with push-to-talk service provider Nextel in 2005.

“We are still looking for evidence that Sprint is generating positive momentum around its postpaid marketing to return back to positive postpaid subscriber growth over time,” Citigroup analyst Michael Rollins wrote in a recent report.

In an effort to retain and attract customers, Hesse has already embarked on a new brand campaign that aims to position Sprint as the “superior network.” But Rollins says that the company hasn’t “gone far enough to differentiate its message on network quality perception or price.”

Hesse has also said that improving Sprint’s customer service is one of his top priorities.

“Not only are we not attracting enough new customers, but our existing customers are leaving us at too big a rate,” Hesse had told Fortune in an interview last February, after Sprint posted a fourth-quarter loss of $29.5 billion and a continued decline in subscriber numbers.

There’s no question Hesse has his work cut out for him. But if his first five months in at the company’s helm are an indication of what’s to come, you can count on seeing more changes at the number three mobile operator - for better or worse.

By Michael V. Copeland

If you want a hint at where innovation in the gadget world is headed, talk to the chip guys. These nuggets of insanely complex silicon that companies like Intel, AMD (AMD), Atheros, Broadcom and Marvell (MRVL) are creating today will end up in the phones, laptops, televisions and mobile video/music/Internet devices of tomorrow.

We all know that Intel is dead-set on making WiMax — wireless access measured in square miles — a reality. When they start shipping WiMax PC cards in laptops is another matter (Intel (INTC) said it’ll be around the middle of the year), but when they do, your laptop might start acting and looking more like the tidy mobile device it should be. Think about a sub-subnotebook machine, always connected to a broadband signal — it might make video calls via VoIP, stream movies, take photos and send them wirelessly back home or to the office. I want one now, but it doesn’t happen without the chipset (and the network infrastructure to go along with it). That’s a ways in the future for most of us, especially in the United States. But the capability is coming soon, and a raft of new gadgets that take advantage of it will follow.

One of the most interesting chip trends I saw last week at the Consumer Electronics Show in Las Vegas was encapsulated in a little device called the Eye-Fi. Here’s a gadget that exists today, but has lots of implications for tomorrow. What the Eye-Fi does is automatically stream photos from your digital camera via your Wi-Fi network to your PC or an online photo service. What the Eye-Fi team has done essentially is wrap a service around a common flash memory card and a low-power Wi-Fi chip from Atheros (ATHR). It’s these lower power Wi-Fi chips that are extremely interesting, when you start thinking about other services they enable.

All the manufacturers in that realm of the chip business are working on prototypes that are as power efficient and powerful as possible. But think about all the things that can happen if you can put Wi-Fi into all sorts of mobile and fixed devices and connect them to either the Internet or a private network. Gadgets get smart and can receive, send and potentially respond to whatever information they are set up to handle.

It could be smarter light switches that turn off and on via an e-mail or text message, or LCD picture frames that stream your e-mail to your bedside and upload a recipe to the kitchen screen every day before dinner. Or maybe some slick mini-display that scrolls updates from your Facebook friends on one side, reads you the news on the other, and does any number of other things that you find important or entertaining.

Who knows? The possibilities are numerous, but it begins with these chips now starting to ship. It also calls into question the future of other wireless standards like Bluetooth and Zigbee. Zigbee, a low-power wireless technology, has never really taken off. Bluetooth has, but combining Bluetooth with Wi-Fi in devices is much more of a headache than engineers would like it to be. Low-power Wi-Fi plays nicely with its full-power brethren and has the potential to sweep both other wireless standards away.

In the Broadcom (BRCM) booth at CES I got a demonstration of a lower power chip now ready to ship that allowed for high-definition video, graphics and audio in such a small package that you can already see all the little video devices/phones it will spawn. One very cool potential application combined that low power HD video chip with a motion control chip that Broadcom builds for the Wii controller and another very popular music device/phone that begins with the letter “i.” Basically, you get a handheld Wii, which, I would bet you’ll be seeing sometime in the near future.

By Michal Lev-Ram

A lot happened in wireless this past year, from the debut of the iPhone to Verizon Wireless’ move to open its network. But 2008 promises to be just as eventful, starting with the Federal Communication Commission’s spectrum auction in January. Here’s a look at the 10 most significant events and trends in the coming year.

1. Wireless networks will remain the domain of wireless operators: There’s been talk that the upcoming 700-MHz spectrum auction could present an opportunity for a new carrier to emerge, given that companies like Google (GOOG) and even oil giant Chevron (CVX) have registered to bid. But most analysts agree it’s unlikely anyone but the current big mobile operators will win the showdown. “AT&T (T) and Verizon Wireless (VZ) will be the most aggressive bidders,” says Forrester Research analyst Charles Golvin. But regardless of who wins, the wireless world will change given an FCC requirement that the 700-MHz spectrum be open to any device.

2. The first Android phones hit the market: Taiwanese phonemaker HTC has said it expects to launch the first cell phone based on Google’s Android mobile platform by midyear, and other phonemakers are expected to follow. (Android is a wireless operating standard that aims to make the mobile data experience more Internet-like.)

3. Cameraphones will get even fancier: Have you checked out Nokia’s (NOK) N95 - a picture-taking machine that comes with a five-megapixel camera and still fits in your pocket? That’s the future of multimedia phones. “For the first time, in 2007 cameraphones became the majority,” says Mark Donovan, an analyst with research firm M:Metrics. “In 2008 we’ll see the technology continue to improve.” In the United States, 61 percent of phones already have built-in cameras, and there’s a growing range of uses for them. In addition to uploading and sharing photos directly over cellular networks, people will be able to take pictures of ads to get coupons sent to them via SMS or get product information by taking a shot of a barcode.

4. Mobile ads will come to a cell phone screen near you: Sure, estimates of mobile advertising revenues have often turned out to be overblown, but that doesn’t mean the industry isn’t making headway. In 2007, many of the big players - Google, Yahoo (YHOO) and Microsoft (MSFT) - made mobile ad-related acquisitions. Expect to see the fruits of that shopping spree start to appear later in 2008. It will be a while before subscription-based models lose ground to ad-based ones, much like what happened on the Internet, but the wireless industry is slowly opening up to ads.

5. WiMax will become available: This is the year Sprint (S) will launch its Xohm mobile broadband service in select markets like Chicago, Baltimore and Washington, D.C. By end of 2008, Sprint expects to reach 100 million customers with its new ultra-fast mobile data service. While Nokia’s Internet tablet will be one of the first compatible devices available on Sprint’s new network, analysts don’t expect to see affordable WiMax-enabled phones anytime soon.

6. Openness will continue to dominate the wireless lexicon: You can thank Google for this one - ever since the Internet search giant began lobbying the FCC to open up the 700-MHz spectrum, “open” has become the latest buzzword in the cellular world. At first the big mobile operators tried to fight it, but once they realized they couldn’t beat Google they joined in. Look for holdout AT&T to become more open to the possibilities of open in 2008.

7. Nokia will become a major mobile software player: With its new chief technology officer based in the Silicon Valley, a reorganization that will make software and services one of the company’s main business groups and the upcoming launch of its Ovi web portal, expect the Finnish phonemaker to become much more than a hardware player in 2008. The company’s buying streak (it’s already snapped up startups like photo-sharing service Twango and digital mapmaker Navteq) is likely to continue.

8. Getting lost will get harder: What, you don’t have a GPS-enabled phone? Don’t worry, you will soon. That’s because the FCC’s “Enhanced 911″ rules is slowly forcing U.S. carriers to make their handsets GPS-capable. That in turn will drive more and more location-based services (think social networking and advertising) in 2008.

9. More touchscreens: The iPhone wasn’t the only touchy-feely phone to come out in 2007. There was also the HTC Touch and Verizon’s Voyager and Venus devices, which launched in time for the holiday season. But expect to see even more all-touch devices in 2008. According to ABI Research, over 100 million handsets with touchscreens will be shipped in the new year By 2012, that number is expected to reach 500 million.

10. Silicon Valley will become a wireless industry hot spot: The Valley is home to iPhone-maker Apple (AAPL), Android creator Google, Nokia’s new CTO and countless mobile startups. With the increasing focus on software and services - not just phone manufacturing -  Silicon Valley will become even more prominent on the wireless map.

By Michal Lev-Ram

Half the world doesn’t even own a mobile phone but wireless carriers are already fighting over the next-generation cellular network.

Consumers may care less about whether they’ll be using WiMAX, LTE or UMB to download video to their phones or browse the Web faster than ever before. But one by one, mobile operators are aligning themselves with one of these competing next-generation, or 4G, technologies, placing billion-dollar bets on the horse they hope will win the race.

All three of the dueling technologies are Internet Protocol-based and tailored for mobile television, video chat and other data services that eat up a lot of bandwidth.

The first of these technologies to hit prime time will be WiMax, which Sprint (S) is expected to soon launch in three trial markets — Chicago, Washington D.C. and Baltimore. By the end of 2008 the company says it will reach 100 million people with its new network. Motorola (MOT), one of the suppliers of infrastructure equipment — and eventually WiMax-enabled phones — for Sprint’s upcoming service, says it has signed 15 contracts for commercial WiMax networks.

“We’re driving it at about twice the pace of traditional cellular technologies,” Fred Wright, senior VP of Motorola’s home and networks mobility unit, told reporters earlier this week.

WiMax proponents claim that the technology is superior to other 4G standards because it’s faster and more affordable. But Philip Solis, an analyst with New York-based ABI Research, says all 4G networks are more or less created equal.

“The three major 4G technologies are pretty much on par with each other,” says Solis, though he adds that WiMax has already been standardized and deployed.

That didn’t stop Verizon Wireless (VZ) from picking LTE — Long Term Evolution. Solis says LTE isn’t expected to become widely available until 2010, but Verizon says it chose the technology partly because the roaming potential it will have with Vodafone. The British company owns a 40 percent stake in Verizon and has already chosen LTE as its next generation technology.

Although the two largest CDMA carriers in the United States have picked opposing 4G technologies, Motorola’s Wright says that won’t slow adoption of next-gen networks.

“There’s probably more industry confusion that was created than anything else,” he says.

The U.S.’s No. 1 wireless carrier, AT&T (T), has not decided which 4G network it will deploy.

In addition to WiMAX and LTE, AT&T has yet another technology to choose from — Qualcomm’s (QCOM) UMB, or Ultra Mobile Broadband. So far, though, no mobile operator has committed to UBM.

But the bigger question — beyond whether the 4G network of choice will be WiMAX, LTE or UMB –– is whether consumers are as hungry for wireless broadband as carriers think they are.

“We’re all hoping they’ll want to watch TV on their cell phones,” says Qualcomm executive Joe Lawrence.