On Oct. 7, Sprint finally announced their future intentions regarding “4G technology”. While there was no surprise that Sprint has decided to drop WiMAX in favor of LTE (probably the best part of the announcement), Sprint’s plans will result in the termination of it’s Nextel PTT unit and effectively try to bankrupt Clearwire so Sprint can pick up the pieces on the cheap. Meanwhile, Sprint is suing to block the AT&T-T-Mobile merger, stating that the merger would leave 2 giant wireless companies with Sprint a distant third. As I’ve said before on this blog, Sprint’s problems aren’t because AT&T and Verizon have an unfair advantage; it’s because Sprint is just incompetent. I have corroborating information from others in the wireless world. And this plan of Sprint's shows just how bad their incompetence is.
I’m going to ignore Sprint’s iPhone deal, which suggests that even under optimal conditions, Sprint will not turn a profit on the iPhone until 2014—even if they meet their expectations on the contract. But, as an aside, Steve Jobs' likely final business decision was a stroke of genius at the expense of Sprint’s CEO, Dan Hesse. Apple will never get a deal that good ever again.
So let’s sum up Sprint’s LTE plans… They plan to deploy LTE in their 1900-MHz band currently occupied by their CDMA network. This is far higher in the spectrum range than AT&T and Verizon, which deploy their LTE networks in the 700 MHz band (AT&T will also deploy LTE in the AWS bandwidths of 1.7/2.1 GHz, similar to where Sprint’s network will be). Translation: Sprint will need more towers than AT&T and Verizon does to cover the same areas. Sprint will likely deploy 5x5 MHz LTE Spectrum, far lower than the 10x10 MHz spectrum Verizon and AT&T (in some areas) has for LTE. Translation: Sprint’s LTE rate will be slower than Verizon and AT&T, and it may even be slower than its current WiMAX network, which goes up to 10 MHz as well.
As a result of Sprint’s LTE deployment, their CDMA network will move to 800 MHz, which effectively means the end of its Nextel iDEN network. They will likely sell the iDEN equipment to somewhere else in the world, but all the Nextel PTT users will either be eliminated or forced to join Sprint’s PCS network.
As for Sprint’s WiMAX network it shares with Clearwire, after 2012, Sprint will stop selling WiMAX handsets. My hunch is that Sprint will stop supporting WiMAX at that time, leaving its WiMAX users out in the dark. It’s ironic, considering Sprint owns 54 percent of Clear, but Sprint and Clear in recent years has mixed together about as well as oil and water. Clear is planning to deploy LTE on it’s network, but it needs money and Sprint has no intention of supporting Clear after their current contract with Clear is over in 2012. In fact, Sprint is hoping Clear goes bankrupt to scoop up the spectrum Clear owns. Because without Clear’s spectrum, it’s a near guarantee Sprint would be forced to end it’s unlimited data packages, given the limited amount of spectrum they would have minus Clear.
Clear owns spectrum in the 2.6 GHz range, which isn’t ideal for deployment of LTE, but it has huge advantages. The 2.6 GHz Spectrum was bought by Clear and Worldcom in 2001. When Worldcom went bankrupt in 2002, Nextel picked up the spectrum for a song ($144 million) and Sprint inherited the Spectrum when they merged with Nextel. Sprint gave the spectrum to Clearwire in 2008 as part of gaining 54% of the Craig McCaw founded company. Now Sprint is hoping that a Clear bankruptcy would enable Sprint to reclaim their spectrum and add Clear’s spectrum. The idea would be that Sprint would claim a huge amount of spectrum with which they could deploy an larger and faster LTE network on the cheap.
But the 2.6 GHz spectrum Clear owns has become the most prized wireless spectrum in the US, and it’s unlikely Sprint would be allowed to take it without a fight. For one thing, the amount of Spectrum Clear owns is huge (about 120 MHz, maybe even more). If any major Wireless Company gets a hold of that spectrum, it would alleviate any spectrum crunches those companies would have for a long time. Second, the 2.6 GHz spectrum has seen many LTE deployments in the world already and could easily be a world LTE standard, making roaming a likely possibility. So, it Clear goes bankrupt, expect a fight between AT&T, Verizon, and Sprint over the spectrum. And, even if Sprint won the whole spectrum, I would expect it to pay a huge price for it (certainly above the $144 million Nextel paid for it—I estimate it would cost at least $25 billion for the whole spectrum). And you don’t think AT&T would love to pay Sprint back for their attempts to block AT&T’s attempt to buy T-Mobile to acquire more spectrum. With Sprint needing cash, it’s unlikely Sprint would be able to hold on to the entire spectrum without court victories.
Even if Sprint gets everything it wants, the hypocrisy they are showing over the AT&T-T-Mobile merger while they try to snuff out Clear is blatant. Also, there is no guarantee that Sprint will be able to do anything with that spectrum due to financial issues. And even if they do, Sprint’s reputation suggests they will deploy an inferior product. It’s time for the FCC and the DoJ to call Sprint on their hypocrisy and tell Sprint to try and succeed on their own. Maybe Sprint will survive and maybe they won’t. But it’s time for Sprint to prove their value in the consumer world and not in the courts.