Sprint Nextel Goes Back To Square One
By Andy Patrizio
Sprint Nextel was the first American wireless provider to offer a true 4G service. Not an amped up 3G service like AT&T and T-Mobile have done, but an actual 4G technology network, although consumers complained that it didn’t offer the speeds promised.
Sprint might be further along than Verizon if it were a stronger, larger player not saddled with billions in debt, and a recent change in strategy will only set the firm back even more.
Sprint Nextel launched its first 4G product, a wireless card for laptops, in December 2008, and shipped the first 4G phone in the U.S., the HTC Evo 4G, in June 2010. However, Sprint chose to cast its lot with Clearwire Corp., which uses a 4G network technology called WiMAX.
WiMAX is the product of the tech industry and sponsored by companies like Intel, while LTE is the product of telecommunications companies like Japan’s DoCoMo. Both promise high speeds and for consumers, there is little difference. The only difference is equipment on the back end, and even there, WiMAX and LTE have significant overlap.
In 2011, things went a little haywire. In July, Sprint announced a 15-year agreement with LightSquared, where Sprint would get access to up to 50 percent of LightSquared’s 4G network, and now the FCC is threatening to revoke LightSquared’s license because its proposed network would interfere with GPS and other existing networks.
In October, Sprint announced it would cease WiMAX deployment and would commit fully to LTE instead. Sprint didn’t own its 4G network the way Verizon owns its own 4G network; it was leasing and reselling ClearWire’s network. It will sell WiMAX devices for the rest of 2012 but plans to have a significant LTE network, its own, not leased, up and running by year’s end.
The WiMAX network will not go away for a while. Look at the old Nextel iDEN network, which has the push-to-talk technology. Sprint is only now phasing it out and it has owned Nextel since 2005. So WiMAX will be around for a few years to come until it’s safe to assume most or all devices are off the market.
Sprint will continue to expand WiMAX in 2012 due to prior commitments to ClearWire, and it expects to have around 120 million Americans in 71 markets covered by the end of the year in around 30 states. At that point it will stop WiMAX expansion and focus all of its efforts on LTE expansion.
This January, Sprint announced its first LTE deployments would be Atlanta, Dallas, Houston, and San Antonio for later this year. Speeds of the new network still remain undisclosed. The rollout will accelerate throughout 2012 and Sprint expects to offer LTE services to 123 million people in 2012 and over 250 million people in 260 metropolitan areas by end of 2013, with the LTE rollout complete by 2014.
Sprint is launching its LTE network with three devices: the Galaxy Nexus from Google, the LG Viper 4G LTE, and the Sierra Wireless Tri-Network Hotspot, a 3G and 4G WiMAX/LTE mobile hotspot. The company plans to have 12 to 15 devices available by the end of 2012, ranging from phones to USB modems to tablets.
Sprint’s big competitive differentiator, which it has been pushing in TV ads, is that it has no data caps. If you sign up for the Everything Data Plan with Any Mobile, you get unlimited data, texting, and calling to and from any mobile phone in America while on the Sprint Network. That offer is for its WiMAX network. Sprint has not yet said if it will offer it for LTE customers as well.
Sprint is a company in significant transition. Beyond the aforementioned shifts, adopting the iPhone has caused short-term pain. The company’s promise to buy $15 billion in iPhones from Apple means it won’t be profitable in the iPhone business until 2014.
And just recently, the company was set to merge with MetroPCS in an $8 billion merger but the deal was scrapped by the board of directors despite the CEO Dan Hesse’s approval, indicating the board’s lack of confidence in Hesse. As it is, the company is cash-strapped and sitting on $16 billion in long-term debt, giving it no room for error. The MetroPCS merger would have saddled the company with even more debt. And if the board is getting impatient with Hesse, that could lead to further chaos at a company that can’t afford to fall any further behind.
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