As part of its fourth-quarter earnings report, Sprint disclosed on Wednesday that it sold 1.8 million iPhones during its first quarter carrying the Apple smartphone.

Of those, 40 percent of the sales were to new customers, Sprint said in a slide prepared for its earnings conference call.

Sprint highlighted a range of devices, but I’ve circled the one that I think had the biggest impact.

For the three months ended Dec. 31, Sprint lost $1.3 billion, or 43 cents per share, on revenue of $8.7 billion. That compares to a loss of $929 million, or 31 cents per share, on revenue of $8.3 billion for the same quarter a year earlier. It’s also a much wider loss than in the prior quarter.

“Our strong fourth quarter performance illustrates the power of matching iconic devices like the iPhone with our simple, unlimited plans and industry-leading customer experience,” CEO Dan Hesse said in a statement. “During the past year, Sprint added more than 5 million net new customers and grew wireless service revenue by more than 5 percent, including 17 percent for the Sprint platform. This momentum gives us confidence as we execute our Network Vision upgrade and 4G LTE roll-out.”

The company added more than 1.6 million customers overall during the quarter, including both prepaid, wholesale and contract customers.

Sprint also added two more cities — Baltimore and its hometown of Kansas City — to the roster of launch markets for the company’s LTE service, which will begin around midyear. It will also launch service in Houston, Dallas, San Antonio and Atlanta at that time.

The move also will result in four top executives leaving the company, according to a memo from CEO Dan Hesse.

“As the wireless market has evolved, the lines between consumers and businesses have blurred,” Hesse said in the memo, which was first reported by Reuters. “Because of the enormous investments we’re making this year in Network Vision and in the iPhone, we need to consistently be looking for ways to be more efficient.”

Leaving the company are divisional presidents Bob Johnson and Danny Bowman and senior VPs Chris Rogers and John Carney.

All sales will now report to Paget Alves, with all consumer and business marketing being headed by Bill Malloy. Sprint’s machine-to-machine business will switch over to wholesale unit president Matt Carter.

A Sprint representative confirmed the moves and the authenticity of the memo.

Although Sprint got its way in seeing AT&T’s efforts to buy T-Mobile derailed, the company faces plenty of hurdles of its own, and remains a distant No. 3 to AT&T and Verizon Wireless.

The company had placed a big bet on being first to market with a high-speed 4G network, choosing WiMax. However, with LTE offering higher speeds and more ubiquitous adoption, the carrier is now shifting gears and aiming to build an LTE network, as well.

Sprint said this week that it will launch by midyear in several southern U.S. cities, but it now trails both AT&T and Verizon in the LTE race.

Also, as paidContent’s Tom Krazit notes, the Sprint Web site could do with a bit of business/consumer consolidation, too. The screenshot below is what folks see when going to Sprint.com:

Updated at 1:40 pm PT to include confirmation of the moves by a Sprint representative.

“For those that want to abuse it, we can knock them off,” Hesse said, according to a Dow Jones Newswires report. The report also said the carrier was slowing the speeds of about 1 percent of its most data-hungry customers.

However, in a blog post on Friday, the carrier insisted that it is not slowing down the speeds of any of its customers on traditional postpaid contract plans.

“Reports that Sprint throttles the top one percent of data users are false,” Sprint said in the post. “At yesterday’s investor conference, Sprint CEO Dan Hesse was referring to Sprint’s right to terminate service of data abusers who violate Sprint’s terms and conditions.”

Hesse’s comments raised a lot of eyebrows given that Sprint has spent a fortune on ads reminding Americans that it is not charging overages like AT&T or Verizon Wireless, nor is it slowing the speeds of those who use a lot of data, as does T-Mobile USA.

Sprint said it contacts customers doing things like using a ton of off-network data or tethering their devices, but says it reserves the right to terminate customers that don’t change that behavior. “Consistent with our advertising, engaging in such uses will not result in throttling for customers on unlimited data-included plans for phones.”

Also, as we’ve reported, the company is exploring using so-called throttling on its Virgin Mobile prepaid brand.

Sprint CEO Dan Hesse

Shares of Sprint are rallying by about 6 percent in after-hours trading, on word that AT&T has abandoned its $39 billion bid for T-Mobile.

That’s really only a jump of 13 cents per share — a figure that says a lot about the pickle in which Sprint remains, despite the fact that its arguments against the AT&T-T-Mobile combination have prevailed.

Sprint no longer has to deal with the threat of a merged AT&T-T-Mobile. But it still has to cope with the fact that it is a distant No. 3 to AT&T and Verizon Wireless. And, after betting on a different 4G technology, the company also has to bring up an entirely new network, all while trying to turn off its older Nextel network.

Still, there is some cause for celebration, an opportunity that Sprint did not let go to waste.

“From the beginning, Sprint has stood with consumers who spoke loudly and clearly that AT&T’s proposed takeover of T-Mobile would create an undeniable duopoly that would have resulted in higher prices, less innovation and fewer choices for the American consumer,” Sprint said today in a statement, in which it also praised federal regulators for their opposition to the deal.

Sprint and its CEO, Dan Hesse, had opposed the deal mightily before government regulators and Congress, and in the court of public opinion, investing a lot of political capital in the process.

That said, the deal’s failure doesn’t exactly help Sprint out of the messy spot it’s in.

For one thing, Sprint is still losing money. In its most recent quarter, it booked a $301 million loss on revenue of $8.3 billion, which was an improvement over the prior year’s period. On the bright side, it added 1.3 million customers — and that was before it had Apple’s iPhone in its stores to help entice new customers.

But while having the iPhone is nice, it’s not helping the bottom line. As The Wall Street Journal reported in October, Sprint has committed to buy more than 30 million iPhones, which will cost it as much as $20 billion over time, and on which it expects to lose money through at least 2014.

And that’s not even the half of it. Sprint also plans to spend big to build a new LTE network in 2012, and currently relies on WiMax as its 4G technology. With $5 billion in cash and short-term investments on its balance sheet as of the end of December, Hesse said, the company will have to go to the credit markets and borrow to get the build-out done.

Meanwhile, its relationship with the wireless broadband concern Clearwire isn’t exactly helping. Clearwire is the provider of Sprint’s 4G technology, and relies heavily on Sprint for its funding. By using Clearwire’s WiMax technology, Sprint was first to the market with 4G, something that gave it an early advantage over its rivals. But that the move also left Sprint alone as both AT&T and T-Mobile Verizon joined numerous carriers in Europe in moving to a rival 4G technology, known as Long-Term Evolution, or LTE.

Had Sprint not started the move to LTE, it likely would have faced an increasingly tough time getting device makers to bring out their latest and greatest devices for a WiMax standard that few other carriers were adopting.

So for Sprint, while one important battle is won, the war to turn the company around — and it will be a tough one — is far from over, and far from victory.

Update: Initially I identified T-Mobile as going launching an LTE network, which it’s not. I meant to say Verizon. Sorry about that.

AllThingsD’s Ina Fried contributed to this report.

“We stand for simplicity and value,” Hesse said, speaking Thursday at the company’s developer conference in Santa Clara, Calif. “It’s about simplifying the business in every way possible.”

Sprint has been making a number of changes. Although it continues to tout unlimited data plans for phones, the company has also added a surcharge for smartphones, curtailed its generous early upgrade program and, most recently, ended an unlimited data plan for its 4G mobile hotspots.

Hesse noted that customers want simplicity and that customers will pay for simplicity — in some cases even paying more for that convenience.

Hesse noted that Sprint’s stock has been under pressure. He said that stems from two big investments the company is making. One is on building its next-generation network; the other is by offering big subsidies on the iPhone.

“They are going to be a big cash drain,” he said, adding that both, however, are necessary.

“Having a great network is just table stakes to being a great wireless company,” Hesse said. “We are going to do what it takes.”

That said, the moves will come at a cost.

“We’re going to have to go to the markets and borrow money — we’ve said it,” Hesse said.

Hesse took the stage to a loud round of applause. “I can tell I am not at a shareholders’ meeting.”

Update: On the device side, Hesse declined to offer much in the way of roadmaps for the future, but said that Sprint plans to introduce LTE devices next year, as well as supporting all of the major phone operating systems. “We will continue to support Android, iOS, RIM and Windows,” he said.

Sprint’s current 4G technology uses WiMax, but the company has said it will start building an LTE network next year. Hesse said the plan is to have devices with WiMax and CDMA and those with LTE and CDMA, but not necessarily any that have both WiMax and LTE support.

Asked about the AT&T-T-Mobile merger, Hesse said, “basically it is in the courts. That’s all I can really say at this point.”

As for whether Sprint might buy assets if the merger does go through and AT&T is forced to divest certain assets: “I’m not going to speculate on what Sprint may or may not do,” he said.

During an earnings call Wednesday, Hesse claimed iPhones use about half the network resources required by Android handsets, a feature that weighed heavily in the carrier’s decision to add Apple’s device to its portfolio.

“There is a misperception that our launch of the iPhone will increase the load on Sprint’s 3G network and require us to spend more 3G capital,” Hesse said. “The reverse is true. iPhone users are expected to use significantly less 3G than the typical user of a dual-mode 3G, 4G device. Even adjusting for more total new customers being added to the network, we believe they will put less load on our 3G network than they would have if we did not carry the iPhone.”

In other words, Sprint believes the iPhone is so data efficient that it will help the company continue to offer unlimited data plans for its smartphones — even following the debut of iCloud, whose services are presumably on the data-heavy side. Evidently, Apple’s strict network efficiency requirements, which prohibit apps from pinging networks as often as those on other operating systems, and the iPhone’s ability to quickly offload data onto Wi-Fi goes a long way toward reducing network congestion.

So the iPhone will likely be a big boon for Sprint, though one that’s not without risks. The carrier says the device’s benefits won’t exceed its costs until 2015. And in the meantime it may need $7 billion in new financing to cover up-front and network costs related to it.

“Growth in Sprint brand net additions was achieved without the benefit of Apple’s iPhone 4S and iPhone 4, which launched Oct. 14,” Sprint said, adding that the iPhone should add to the company’s base and that “iPhone users are expected to be among Sprint’s most profitable customers.”

On the earnings front, Sprint reported a net loss of $301 million, or 10 cents per share, on revenue of $8.33 billion. That compares to a loss of $911 million, or 30 cents per share, on revenue of $8.15 billion in the year-ago quarter. The company also said it posted a positive $208 million in operating income, compared to a $213 million operating loss a year ago.

“We are adding to our customer base, our ARPU (average revenue per user) is increasing, and as a result our wireless revenues are growing,” CEO Dan Hesse said in a statement.

The company noted that it has expanded its credit line and changed some of its terms. Sprint also stressed that it has total liquidity of about $5 billion, including $4 billion in cash and investments. Its next debt maturity, some $2.3 billion worth, is slated for March.

At the fall CTIA show on Tuesday, the same executives were assembled, but things weren’t nearly as fun. First of all, there was no Mr. Boo-ya. More importantly, the executives appeared one after the other, rather than agreeing to again share a stage.

The result was more stump speeches than discourse.

Sprint CEO Dan Hesse, who is also the chairman of the CTIA, kicked things off with a talk largely focused on environmental issues, noting that the industry trade group plans later today to announce new guidelines for product reuse, recycling and packaging.

“We’re making real progress,” Hesse said. He also noted that it was cellphones that transmitted dramatic imagery from the Middle East as governments changed, and wireless phones that helped after natural disasters in the U.S. and around the globe.

Ralph de la Vega, CEO of AT&T Mobility, focused on some of the investments his company has made, including $80 million to open research “foundries” in Palo Alto, Calif.; Plano, Texas; and Israel.

The speeches weren’t totally devoid of zingers. Hesse did note that de la Vega looks a lot like Lincoln assassin John Wilkes Booth, who was also an actor. Speaking after Hesse, de la Vega noted the observation came from Hesse, “a guy who is the best actor in wireless we have today.”

De la Vega was followed by Verizon Wireless CEO Dan Mead.

Like de la Vega, Mead spoke about his company’s investment in facilities that help network equipment makers, operating system creators and app developers to collaborate. Verizon opened an application center in San Francisco earlier this year, following on the heels of an earlier 4G LTE center in Waltham, Mass.

Mead also spoke about the impact the industry has had on society in the decade since Sept. 11, 2001, when, he said, the wireless business established itself as a key aid to first responders in the aftermath of crises.

“Since that time, we’ve responded to hurricanes and tornadoes and floods, helping people to cope,” Mead said. “We have rescued hikers, boaters and others who have lost their way. We have used our technology for the greater good again and again.”

Although Mead and others talked about the competitiveness of the industry, Tuesday was more lovefest than slugfest.

“Collaboration has played and will continue to play a major role in our success,” Mead said.

The No. 3 wireless company is making a multibillion dollar gamble that Apple Inc.’s gadget will be the ticket to a turnaround, even though Sprint Chief Executive Dan Hesse told the board in August that Sprint would likely lose money on the deal until 2014, according to people familiar with the matter.

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The star of the show is the Photon 4G, which packs a dual-core Nvidia Tegra 2 processor, 4.3-inch screen, the Gingerbread version of Android and an eight megapixel camera, as well as the ability to plug into a laptop dock, a la the Motorola Atrix.

The other device shown Thursday was the Motorola Triumph, the first Motorola device exclusive to Sprint’s Virgin Mobile prepaid brand. The thin 4.1-inch touchscreen device has HDMI output and the ability to capture 720p video.

Sprint and Motorola said the devices would be available this summer, but didn’t announce pricing or exact availability.

Motorola has been a longtime partner for Sprint’s Nextel brand, but its Android smartphones have been more closely tied with Verizon, where Motorola has powered many of that carrier’s Droid devices. To underscore the partnership, Thursday’s announcement featured Motorola Mobility CEO Sanjay Jha along with Sprint Chief Executive Dan Hesse.

Unfortunately for Sprint, it’s not Dan Hesse. Rather, it is Renata Hesse, a veteran antitrust lawyer–and no relation to the Sprint CEO. Hesse is a former DOJ antitrust lawyer who worked on the government’s opposition to the Oracle-PeopleSoft deal, among other transactions. Hesse is currently a partner with Wilson, Sonsini, Goodrich and Rosati.

“Renata’s wealth of legal expertise and experience is a welcome addition to the review team and I am thrilled that she will soon be joining us,” FCC Chairman Julius Genachowski said in a statement. “Her leadership will help ensure that our review of this important transaction is fair, thorough and efficient.”

Both the FCC and Justice Department must sign off on the deal. Sprint, headed by the other Hesse, has vowed to fight the deal.

Back in January, the carrier added a $10 surcharge for nearly all smartphones. The company has also become more restrictive in its loyalty programs, lengthening the amount of time before which most customers are eligible for a fully-subsidized upgrade.

“Any time you increase prices you are not going to get a lot of high fives from the customer base,” Dan Hesse said, speaking at a J.P. Morgan technology conference in Boston. However, he said, the alternatives were things like data caps or throttling customers once they hit a certain usage level.

The company is just starting to see the profit benefit from the move, which is showing up in terms of higher revenue per user. The company should get a full quarter of that benefit in the second quarter. However, Hesse said that the company is also seeing greater competition this quarter as Verizon gets a full quarter with the iPhone and Thunderbolt and AT&T continues its $49 price promotion with the iPhone 3GS.

“It’s a very competitive environment out there,” Hesse said.

Hesse also pointed to a just-announced survey showing Sprint neck and neck with Verizon Wireless at the top of a key customer satisfaction index, with AT&T and T-Mobile seeing declining numbers. Hesse said putting up those high numbers are good, but added that the fact that people are surprised “tells me we’ve still got a lot of work to do on the brand.”

As for the company’s always complicated relationship with Clearwire, Hesse said that things have been improving and pointed to the companies’ recently renegotiated wholesale deal.

Hesse also said that while its rivals were quick to team up on a mobile payments effort, Sprint is still figuring out its best option.

“We’re still evaluating what we want to do in mobile payments,” he said. “It’s fairly complex.”

And, of course, he talked a bit about his company’s opposition to AT&T’s plan to buy T-Mobile, but we all know how he feels about that.

On Wednesday, four cellular company CEOs are set to testify before a Senate Judiciary subcommittee at a hearing looking into AT&T’s proposed $39 billion acquisition of T-Mobile USA. A day earlier, Apple and Google are set to appear before a different subcommittee to explore issues related to privacy and location-based information.

According to a witness list released on Thursday, AT&T CEO Randall Stephenson, T-Mobile USA CEO Philipp Humm, Sprint CEO Dan Hesse and Cellular South CEO Victor “Hu” Meena are all scheduled to testify at Wednesday’s hearing of the Subcommittee on Antitrust, Competition Policy and Consumer Rights. Also on the list are Gigi Sohn, the president of Public Knowledge and Larry Cohen, head of the Communication Workers of America.

And, if AT&T and T-Mobile needed any more hint that this would not be a friendly audience, they need look no further than the hearing’s title: “The AT&T/T-Mobile Merger: Is Humpty Dumpty Being Put Back Together Again?”

And that’s not the only big tech hearing on Capitol Hill next week. On Tuesday, representatives of Apple and Google are scheduled to appear before the Judiciary’s Subcommittee on Privacy, Technology and the Law at a hearing about location-based data practices

The hearing comes in the wake of concerns over how both companies are handling location-based information gathered on cell phones and tablets. CEO Steve Jobs told Mobilized in an interview last week that Apple would be testifying before Congress.

“They have asked us to come and we will honor their request, of course,” Jobs said. Apple has maintained that it isn’t tracking anyone and that location data found on the iPhone was the relevant portion of a broad, crowdsourced location database. Apple has since released an update to the iPhone operating system that limits the amount of such information stored on the device and ensured that all data is deleted when users opt not to use location-based services.

Google has also defended its handling of information, arguing that the information it collects is necessary to provide location-based services.

While Sprint did lose contract subscribers–114,000 of them–that loss was significantly less than the 464,000 it lost in the first quarter of 2010. Meanwhile, churn fell to 1.81 percent from 2.15 percent (finally time to retire the “hemorrhaging subscribers like Dan Ackroyd’s exsanguinating Julia Child” analogy, I guess)

Sprint’s revenue for the quarter rose about 3 percent to $8.3 billion, surpassing analyst expectations of $8.19 billion. And its loss narrowed to $439 million, or 15 cents a share, from $865 million, or 29 cents, a year earlier. That beat expectations as well. The Street had been looking for Sprint to lose 22 cents.

Not bad, all things considered. As CEO Dan Hesse noted during this morning’s earnings call, being the No. 3 carrier in a market in which the No. 1 and No. 2 carriers both have the iPhone isn’t easy.

“We do typically see a significant impact upon the launch of a new device, or in this case, the iPhone 4 on a new carrier, Verizon,” Hesse said. “The iPhone continues to be a competitive threat to us, first in the hands of AT&T and now in the hands of Verizon….Quarter after quarter, the iPhone is a successful device and one that provides very strong competition to Sprint. Needless to say, Verizon’s introduction of their new iPhone this past quarter had a notable impact on our net add performance for the quarter.”

The paperwork is the first step in gaining regulatory approval for the proposed $39 billion acquisition. The Department of Justice also must approve the deal.

AT&T’s filing includes both the transfer application and supporting documents making the company’s now-familiar arguments that the deal will improve access to next-generation networks and make better use of limited spectrum. AT&T has said it is posting a redacted version of the filing on its merger Web site.

“The bottom line is that our merger with T-Mobile USA will offer significant benefits to American consumers,” AT&T said in a blog posting. “It will address capacity constraints that both of our companies face, which will enable the combined company to provide improved services in the many urban, suburban, and rural markets where the enormous surge in broadband usage is fast consuming available capacity. What this means is fewer dropped calls, fewer failed call attempts, and better data throughput.”

Sprint is opposing the deal and CEO Dan Hesse has promised to fight hard to get the deal blocked. The New York attorney general and Congress have also said they plan to scrutinize the deal closely.

Non-profit group Free Press also lashed out at the deal in a statement on Thursday.

“No matter how many high-priced lobbying firms AT&T hires, it won’t be able to fool Americans into thinking the reconstitution of the Ma Bell monopoly is a good thing,” Free Press Research Director S. Derek Turner said in a statement. “Make no mistake, this deal is about eliminating a competitor and nothing more. AT&T has chosen the marketing slogan ‘Mobilize Everything’ to sell this competition-killing deal, but it’s clear their real goal is to ‘Monopolize Everything.’”

Under the new pact, Sprint commits to a minimum $300 million usage this year, $550 million next year and will pre-pay $175 million for 4G wholesale services to be used in the coming years. The two parties had said they were working on a new pact to resolve a dispute over wholesale pricing.

“Sprint has been our biggest and most important customer and partner since we launched 4G services in the U.S. more than two years ago,” Clearwire interim CEO John Stanton said in a statement. “Today’s agreement further aligns Sprint and Clearwire’s interests and lays the foundation for a continued, constructive relationship. We are pleased to have the resources and partnerships necessary to maintain our 4G leadership and leverage our significant spectrum and capacity for delivering mobile broadband services.”

Stanton took over as interim CEO last month amid a management shakeup. The company also cut jobs late last year and auditors have raised concerns about Clearwire’s future prospects.

Sprint, which owns a big chunk of Clearwire, also praised the new deal.

“We are pleased to reach this wholesale pricing agreement with Clearwire,” Sprint CEO Dan Hesse said in a statement. “We look forward to working with them under this new agreement to provide an expanded offering of 4G capabilities and solutions for Sprint customers.”

The deal also revises how Sprint is charged for devices that run on both its own 3G network and on Clearwire’s 4G network, ensuring that there is a minimum revenue for Clearwire per device and giving Sprint various volume and usage discounts.

Lots of folks stand to be hurt by the deal, Hesse said, from network suppliers to handset makers and from app developers to those that write operating systems. “The entire ecosystem (is threatened),” Hesse said, speaking to Mobilized and other reporters on Friday, following his speech at the Commonwealth Club in San Francisco.

That said, Hesse said he is not sure who will join him in speaking out against the $39 billion transaction.

“There’s clearly a risk that a lot of these companies see in coming forward to oppose a deal that is so favored by a very, very large company.”

Hesse just might have a point there. I mean, what would argue that a deal is anticompetitive better than the fact that those most affected are afraid to speak out against it?

The challenge, though, is that silence alone won’t block the deal.

One of the interesting question in the weeks ahead is who, if anyone, will come out publicly against the deal.

Hesse said he is confident that he won’t be standing totally alone.

“I think there will be a number of companies that will oppose it, but clearly there will be companies that will be concerned about opposing it because of the ramifications for their business,” Hesse said.

As for the deal’s prospects of going through, Hesse said it is too soon to say, but he said he is encouraged by the fact that so many parties are taking an interest. In addition to the FCC and Department of Justice (both of whom must approve the deal), Congress has said it will hold hearings, while the New York Attorney General has also pledged a thorough review.

And not that this is a shocker, but Hesse has said he plans to testify against the deal. I’m more curious who will be in the chair next to him. Also interesting to see will be which–if any–of those that Hesse listed as potentially threatened by the deal, AT&T might convince to argue in favor of it.

If the deal is allowed, “competition will be stifled, growth will be stifled and wireless innovation will be jeopardized,” Hesse said, speaking at the Commonwealth Club in San Francisco. “We just can’t let this happen.”

He also talked about the importance of being open, saying that competitors favor closed approaches with walled gardens and exclusive app stores–a clear reference to the iPhone. If the deal is allowed, Sprint would be the only major carrier not selling Apple’s device.

Sprint has been the most vocal opponent of the proposed $39 billion deal, vowing to fight against the transaction as it moves through the regulatory approval process. Both the Federal Communications Commission and Department of Justice must sign off on the deal.

Hesse pledged to get to the topic at hand–environmental issues–but said he felt compelled to start his talk with a warning. Once he had finished making sure everyone was clear where he stood on the T-Mobile deal, he shifted the talk to Sprint’s eco efforts, including both environmentally friendly devices and workplace policies, such as allowing workers to telecommute and reducing corporate energy use.

In conjunction with Hesse’s talk, Sprint announced the Samsung Replenish–it’s first “green” Android phone.

“We’ve decided we need to do even more to make green even more compelling for our customers,” Hesse said.

To make the phone more compelling, Hesse said the company is offering the Replenish with a monthly service plan that is $10 lower than those available for all its other phones.

“The phone basically pays for itself in five months,” Hesse said.

Hesse also talked about the potential environmental benefits of having so-called machine-to-machine wireless connections that allow for more efficient power generation, among other things.

In some cases, Hesse said the company has had to take risks, noting that market research showed that the green-ness of a phone wasn’t a top consideration among phone buyers. Indeed, while the first products were in the planning process, some folks wanted to kill them, but Hesse said he insisted on bringing the devices to market.

Hesse said that the eco-friendly devices are still just a small percentage of the phones that Sprint sells–in part because some popular features, such as the newest biggest screens, aren’t available in a “green” way.

“They are not in the sales category of the Evo 4g,” Hesse said. “It’s still profitable for us to offer the devices.”

In perhaps his most controversial statement, Hesse said that there would be some benefit if energy costs were higher, noting that people might focus more on conservation.

“I do think energy is cheaper than it should be,” Hesse said.

In a light-hearted moment, Hesse was briefly interrupted as a phone in the audience rang loudly.

“I think somebody has Sprint because you are getting a signal,” he quipped.

Hesse ended his prepared remarks where he started, arguing that the T-Mobile deal would shift the industry from competition into duopoly.

“I believe wireless innovation is at risk,” Hesse said. “I hope you will not sit silent but you will also let your important voice be heard.”

The question and answer session began with the moderator putting Hesse on the hot seat, noting that Sprint was itself talking with T-Mobile about a deal.

“That’s been reported,” Hesse said. “We’ve never acknowledged or denied.”

Why, though, would that merger be OK, the moderator pressed.

“Theoretically, if Sprint and T-Mobile were talking, they are much, much smaller companies than either AT&T or Verizon,” Hesse said, adding that even if Sprint and T-Mobile had merged, they still would have been the number three player.

Hesse was asked by an audience member just what Sprint will do if AT&T is allowed to buy T-Mobile.

“That’s something I don’t want to contemplate, actually,” Hesse said. “We’ll continue to compete as well as we can.

One of the big impacts, Hesse said, is that it could be even harder for Sprint to get the latest hot devices. His rivals, he said, can get exclusivity by promising to take a huge number of devices, in some cases a cellphone maker’s entire production capacity of a given product.

“That’s how an exclusive comes into being,” Hesse said. “”Exclusive devices are really a function of market power.”

Update: AT&T has fired back, calling Hesse’s remarks “way off base” and positioned them as at odds with statements he made before the merger was announced.

“As recently as last October, Mr. Hesse said the wireless industry is ‘hyper competitive’,” AT&T said in a blog post. “The month prior, his CFO talked about how ‘tough’ retail competition is in the wireless market, citing at least six major competitors. In February of last year, Mr. Hesse said, ‘M&A is absolutely a way to get the growth in the industry, if a particular transaction makes sense for anybody.’ “

The two-year contract plan is being offered in addition to a pricier $99 plan that doesn’t start throttling data speeds until a user hits 5GB of data.

For those who don’t have a television or who fast-forward through all the commercials, Sprint CEO Dan Hesse has been all over the airwaves touting his dictionary skills and how the definition of “unlimited” shouldn’t include overage charges or throttling. (Sprint has, however, added a $10 monthly surcharge for smartphones.)

T-Mobile touted the new option as offering a better value, saying customers can save more than $350 a year using its new plan, as compared to rivals.

“Consumers today are looking for even more value and flexibility from their wireless plans,” T-Mobile Senior VP John Clelland said in a statement. “While data plans for many of our competitors continue to be very expensive, T-Mobile is lowering the price of our unlimited plan and offering more options, making it easier than ever for customers to step up to a richer mobile data experience on our 4G network.”

As for the throttling, T-Mobile noted that the slower speeds are only for the remainder of the billing cycle and that its smartphone customers use, on average, about 1GB of data per month.

The industry has been struggling over what to do with unlimited pricing, especially in a business where there is limited capacity. Verizon and AT&T have been moving toward tiered pricing, though Verizon has been offering a limited-time unlimited option for the iPhone and other devices. Sprint, meanwhile, has tried to use unlimited options as a way to stand out from the pack and perhaps gain some ground.

Meet up with anyone in Orlando for CTIA and the first topic is likely to be where you were on Sunday when you first heard about AT&T’s plan to buy T-Mobile.

For answers, I’ve heard everything from cooking to napping to arm-deep in Play-Doh. Nearly all of T-Mobile USA’s PR team was on a plane to Orlando when the news broke. HTC North America head Jason Mackensie was watching his son play at a basketball tournament in Texas when his phone started buzzing with messages from co-workers, as well as folks from both carriers.

But, seek to discuss the topic of the merger in detail and few will comment.

Samsung Mobile Senior Vice President Omar Khan had to be pressed to answer whether he was surprised or not. Eventually, Khan admitted he was surprised, but declined any further comment on the deal. Many other executives and non-executives followed suit, most notably FCC Chairman Julius Genachowski–one of the people whose opinion matters the most.

“Of course you will understand I am not going to comment on that,” he said during an on-stage appearance.

Those that do offer up a comment usually characterize it as good news or business as usual.

“The fortunate thing is we’ve got good relationships with both companies,” Mackenzie said.

Oddly enough, the people most willing to talk are those closest to the deal. Sprint is vocally concerned, while Verizon Wireless CEO Dan Mead says that he isn’t going to get distracted and assumes the deal will probably go through.

“I do have concerns that it would stifle innovation and too much power would be in the hands of just two,” Sprint CEO Dan Hesse said during a keynote in which he shared the stage with Mead and AT&T’s Ralph de la Vega.

Mead, meanwhile, appeared unshaken. “We have a tremendous amount of competition in the industry,” he said, adding that the industry will go through continued change, such as the AT&T purchase. “I’m not concerned about it.”

For everyone else in the industry, it is both the thing on everyone’s mind and the topic no one is quite ready to discuss.

“I do have concerns that it would stifle innovation and too much power would be in the hands of just two,” he said.

Sharing the same stage, Verizon Wireless CEO Dan Mead said that the company is clearly watching things, but noted that his company was built through acquisitions.

“We have a tremendous amount of competition in the industry,” he said, adding that the industry will go through continued change, such as the AT&T purchase. “I’m not concerned about it.”

Mead said that his company had not considered a purchase of T-Mobile ahead of the deal and also told Reuters that his company isn’t pondering acquiring rival Sprint.

As for the AT&T-T-Mobile deal, Hesse noted that it doesn’t really matter what he thinks, since it will be regulators at the Department of Justice, FCC and elsewhere that get to decide.

FCC Chairman Juiius Genakowski, who spoke before the CEO panel, acknowledged the elephant in the room, but declined comment on the deal.

AT&T’s Ralph De La Vega didn’t say too much about the deal, other than to repeat the company’s case that the deal is in the public interest as it helps alleviate the looming spectrum crunch and will expand high-speed LTE service to more of the U.S.

Sprint CEO Dan Hesse, Verizon Wireless CEO Dan Mead and AT&T President Ralph de la Vega are set to speak in a discussion moderated by CNBC’s Jim Cramer. T-Mobile CEO Phillip Humm was also set to be on the panel, but dropped out following AT&T’s announcement that it plans to buy T-Mobile USA for $39 billion.

Before the CEOs take the stage, though, there will be comments from FCC Chair Julius Genachowski.

Mobilized is here in Orlando and will have live coverage when Genachowski starts speaking in just a short while.

6:24 am: Still speaking is Sprint CEO Dan Hesse, acting in his capacity as Chairman of the CTIA.

6:28 am: Hesse has covered off on a laundry list of stuff from distracted driving, to the explosion of apps to recycling cell phones, to the role cell phone cameras have played in uprisings in the Middle East.

He’s finally wrapping up with a plea for the FCC to free up more wireless spectrum.

“Spectrum is also the oxygen that gives our industry life and growth,” he said. “But we are running out of oxygen.”

Genachowski takes the stage, reading his remarks off a tablet.

6:34 am: Genachowski addresses the elephant in the room: the AT&T-T-Mobile deal. Of course you will understand I am not going to comment on that.

6:35 am: He switches back to a popular topic in the crowd–freeing up more spectrum.

6:36 am: Surely it is just a matter of time before 5G will revolutionize the industry, Genachowski quips.

6:38 am: Genachowski is making the case that the mobile sector is critical to U.S. leadership and talking about the importance of the industry. But he’s preaching to the choir.

6:48 am: A lot of carbon dioxide being expended at CTIA talking about how spectrum is the industry’s oxygen.

Starting to wonder when we are going to get to the CEO panel. This keynote only scheduled to run until half past the next hour.

6:51 am: First potentially adversarial comments come as Genachowski extols virtues of open internet.

6:53 am: Now back to talking about spectrum. Everyone can breathe now. More oxygen.

Genachowski touts benefits of voluntary incentive auction where broadcasters and others get a piece of the revenue generated by auctioning off their spectrum.

“it’s the right idea at the right time.”

6:55 am: (Methinks wireless industry would prefer mandatory auctions and sooner rather than later.)

6:56 am: Voluntary incentive auctions could raise $30 billion, Genachowski says. “Not pocket change.” Costs of inaction exceed that, he adds.

6:58 am: Genachowski wraps up and hands off to CTIA president Steve Largent.

6:59 am: Largent mentions that NTT DoCoMo was planning to exhibit at CTIA but says they are understandably not here in wake of Japanese quake.

Largent encourages audience to text REDCROSS to 90999 to donate to relief effort.

7:01 am: Largent said he was on plane when he heard about AT&T-T-Mobile deal.

7:02 am: Jim Cramer introduces Ralph De La Vega and other panelists with a hearty “booya”

7:03 am: Cramer: Other than this weekend’s news, how did you like the play, Dan Hesse.

7:03 am: After joking about the elephant in the room, Cramer asks Hesse about the role cell phones have played in recent revolts in the Middle East.

“I think we are going to play a big role in social change,” Hesse said.

7:05 am: Is any government safe from power of tech, even China, Cramer asks.

“I think mobility creates democracy,” AT&T’s De La Vega. People around the world are speaking and it is our technology that lets it happen.

7:08 am: Cramer: What’s the next equivalent of text messaging — which was huge boom for the industry.

De La Vega says video communication is probably the next big wave. (Of course, video takes up a lot more capacity than texts)

7:09 am: Cramer: Why is my bill so high and why does he have to subsidize the people downloading so many movies.

Verizon’s Dan Mead: First of all, we appreciate your business. Mead says unlimited data plans have been key to fostering growth. However, the whole industry is looking at whether there should be caps or metered use like a water bill.

“It’s certainly an area of interest for the industry,” Mead said.

Hesse is asked if Sprint will have to shift. “Not necessarily,” he said. He notes that home internet is still unlimited, although there clearly is a difference, he said.

“Customers will actually pay a premium for simplicity,” Hesse said. “For now we are monitoring usage very closely” but we are maintaing unlimited.

7:11 am: Cramer asks De La Vega how much of the T-Mobile buy was about spectrum.

De La Vega says it was important, but doesn’t quantify, but notes it’s one of the reasons why the deal is “in the public interest.”

Cramer: Dan Hesse, Do you agree?

Hesse: “My opinion doesn’t matter. I think the FCC and DOJ will have the say on that.”

Notes that if the deal goes through 80 percent of power in two companies.

“i do have concerns that it would stifle innovation and too much power would be in the hands of just too,” he said.

Mead says Verizon is interested and will be observers, but notes that its company was built through acquisitions and that is how it got its spectrum position. “We’ll be watching what goes on here. There may be some things market by market that will be of interest. We are not going to be distracted by this.”

7:11 am: Cramer asks De La Vega how much of the T-Mobile buy was about spectrum.

De La Vega says it was important, but doesn’t quantify, but notes it’s one of the reasons why the deal is “in the public interest.”

Cramer: Dan Hesse, Do you agree?

Hesse: “My opinion doesn’t matter. I think the FCC and DOJ will have the say on that.”

Notes that if the deal goes through 80 percent of power in two companies.

“i do have concerns that it would stifle innovation and too much power would be in the hands of just too,” he said.

Mead says Verizon is interested and will be observers, but notes that its company was built through acquisitions and that is how it got its spectrum position. “We’ll be watching what goes on here. There may be some things market by market that will be of interest. We are not going to be distracted by this.”

7:15 am: Mead said Verizon never really looked at buying T-Mobile.

7:16 am: Cramer asks why his video freezes.

Hesse quips “Because you are on Verizon.”

7:23 am: Cramer: Has AT&T lost a significant number of customers with Verizon getting the iPhone.

De La Vega: Still hasn’t been a quarter. Can’t really comment, he says.

7:31 am: Cramer asks who is a friend and who is an enemy.

Panel lists Microsoft, Google, Twitter and Facebook as all friends, though Facebook could be a “frenemy” if it became its own carrier.

The first extension of the event, it produced some very newsy sessions. We’ll be posting them all.

Today, Sprint Nextel CEO Dan Hesse talks about battling the leaders for dominance among wireless carriers.

It’s not easy being No. 3, but Hesse has tried to mind the gap by beefing up Sprint’s customer service and investing in the prepaid sector to attract a wider audience during the economic downturn. Going forward, Sprint looks to its 4G strategy for growth through its ownership stake in WiMax-provider Clearwire.

Here’s the video of the Hesse interview with Walt Mossberg: