Sprint's 4G Predicament

Sprint's 4G Predicament

Sprint has put a lot of money into developing and marketing its 4G network. This 4G network is made possible by the partnership between Sprint and Clearwire. Currently, Sprint has the majority ownership in Clearwire. Clearwire's 4G network is expanding, and the company wants to continue rolling out the service across the country. There's only one problem: the company needs billions of dollars to finish building its nationwide network.

A few financing options are possible: Sprint could fund the project itself, or it could turn to a competitor to help foot the bill. According to the Wall Street Journal, Sprint's board of directors is debating whether or not to let T-Mobile invest in Clearwire. If Sprint would allow T-Mobile to buy in to Clearwire, the nation's third- and fourth-largest wireless carriers would end up using the same next-generation network.

Earlier this year, T-Mobile USA Chief Executive Robert Dotson indicated his company was looking at various options for 4G, with one option being Clearwire's network. Although allowing T-Mobile to buy into Clearwire may be an option, the Journal points out that T-Mobile USA hasn't put a proposal on the table and some Sprint board members are adamantly opposed to the idea.

Sprint currently has the lead in the 4G race with the country's only 4G network though AT&T and Verizon Wireless are working hard to launch their own 4G networks. Both AT&T and Verizon Wireless have committed to the LTE (Long Term Evolution) standard. Although Clearwire currently uses the WiMAX standard, there's still a possibility it could switch to the LTE standard in the future. Clearwire currently offers 4G service in 49 cities.

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If this happens, we would be looking into a T-Mobile/Sprint merge, which would be very good for both companies. They would still be in "third" but it would allow Sprint to build a larger 4G network and have more customers.

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"T-Mobile USA hasn't put a proposal on the table and some Sprint board members are adamantly opposed to the idea."

Of course T-Mobile wouldn't want in on this. If Sprint has majority ownership, the terms won't be as favorable for T-Mobile. Also, T-Mobile is sitting pretty with its own uncongested 3G service that seems to be plenty fast for all its customers, so why would they need a stake in a 4G network?

Seeing it from the point of view of Sprint, they don’t want to play ball just yet, because the need for 4G expansion (and those billions of dollars) isn’t so dire. It’s not like AT&T’s 3G, which basically imploded with the iPhone’s release because of all the new network traffic. 4G for the time being has plenty of bandwidth for everyone, and who knows? Maybe by the time 4G is being pushed at the limits, the situation will have changed.

Also, if T-Mobile did want part ownership of Clearwire, they would almost certainly want equal stake with Sprint, like a partnership towards developing a 4G network. In that scenario, it might be better for Clearwire to become independent again (admittedly a very difficult proposition, seeing how they would have to buy back their own stock from Sprint), keeping a majority share, with a bunch of different carriers buying stock in them to fund the 4G network. And, if they switch to LTE (or AT&T and Verizon switch to WiMax), they have the potential to get a lot of business come their way.

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This is happening now that my Sprint 3G contract is up this month. They've been promising this 4G roll out for 2 years, and I won't my renew my contract unless they can't provide 4G for cities in flyover country in the next 12 months. 3G just doesn't cut it for day traders, it would be cheaper to to pay for wi-fi when I do need it.

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