Sprint, the first carrier to offer 4G, provides 4G service to 71 markets in 28 states. The problem: Sprint delivers 4G over its WiMax network, which is not compatible with the now standard 4G LTE networks provided by carriers like Verizon and AT&T. Sprint is embracing 4G LTE in a network expansion effort that could be worth $20 billion.
Sprint partnered with LightSquared, announcing the two companies will jointly expand LightSquared’s 4G LTE network, catapulting Sprint in to contention in the 4G LTE marketplace. The agreement between LightSquared and Sprint, expected to span 15 years, has the companies sharing the cost of equipment and network expansion that could be valued at as much as $20 billion over the life of the agreement.
Sprint made the announcement at a time when it is loosing market share to it’s two rivals – AT&T and Verizon. Sprint reports that it has seen net losses in contract subscribers in each of the last four years. Sprint hopes an upgraded network with coverage and speeds in places that customers want to have fast, reliable wireless connectivity will help to retain current subscribers and attract new contract subscribers.
Rivals like Verizon with 110m subscribers in 74 markets, and AT&T’s expected $19 billion investment in its network for this year alone make it hard for Sprint to keep up. Sprint hopes that not only will its network expansion plans draw and retain subscribers; it anticipates that it will be able to offer subscribers plans that are more affordable than those offered by the larger carriers.
Sprint could have some new trouble if the proposed merger between AT&T and T-Mobile is successful. The merger, valued at $39 billion, would vault AT&T ahead of Verizon to become the nation’s largest carrier, in terms of coverage and number of subscribers. The gap between the then second place Verizon, and third place Sprint might be difficult to bridge.
Sprint’s current 4G network is based on WiMax, or metro WiFi. Sprint completed a major expansion of its WiMax network at the end of 2010, and is the only carrier to cover many rural communities that would otherwise not have wireless services. WiMax is slower than 4G LTE at a time when speed and reliability are central to not only voice but also always-on, voluminous data communications. While WiMax delivers download speeds of between 3 and 6Mbps, Verizon’s network delivers speeds of between 14 Mbps and 19 Mbps with handsets like the HTC Thunderbolt – a significant difference.
Sprint’s CEO, Dan Chase, opposes the proposed merger between AT&T and T-Mobile. Mr. Chase said that the merged company would be reminiscent of the 1980s when Ma Bell held a monopoly over telephone service in the United States, stifling competition and severely limiting consumer choice. The FTC broke-up the Bell Company in 1984, to open the market to a range of smaller telephone companies.