Sprint has some decisions to make this year.
First among them: The Overland Park, Kan., carrier needs to choose how it will employ the spectrum freed up by its planned retirement of its Nextel service. Should it stick with its current network architecture or use those frequencies to launch a new 4G service built on the LTE standard endorsed by competitors AT&T, Verizon Wireless and T-Mobile?
Sprint has its own 4G service, operating on a technology called WiMax. Adopting that standard allowed Sprint to launch a fourth-generation mobile-broadband service in October 2008, long before its rivals had their 4G offerings in the market. (Note that AT&T and T-Mobile’s 4G services are really upgrades of their 3G networks.)
WiMax--also used by Clearwire for its Clear Internet-access service--works in a wide variety of phones and modems, but in my tests it hasn’t matched the speeds of Verizon’s LTE service. It also suffers a more serious problem: Most of the industry is going with LTE, short for “Long Term Evolution.”
And Sprint has been showing signs that it, too, may see more of a future in LTE.
Bob Azzi, Sprint’s vice president for network issues, discussed the company’s options in a phone interview last month.
It’s not a question of dumping WiMax for LTE, he said, but of how to use the vacated Nextel spectrum. “It will always be a proposition of WiMax and something else,” Azzi said. He said that 800 MHz band would work well for Sprint’s current 3G CDMA service, while the 1900 MHz band now occupied by CDMA could make a good home for LTE. But WiMax -- now provided on 2.5 MHz spectrum licensed by Clearwire — isn’t geared for those other two blocks, Azzi said.
(Clearwire, meanwhile, has been doing its own tests of LTE as a possible upgrade path.)
So Sprint could decide either to reuse Nextel’s old airwaves for upgraded CDMA service or reshuffle its services to add LTE. Which way will it go? Azzi said “customers want the faster speed of WiMax”--and Sprint can’t readily provide faster speeds on the spectrum it has licensed without going to LTE.
Sprint and Clearwire could add LTE to their cell sites without ripping out racks of existing hardware, but no such upgrade path exists for current WiMax phones. Azzi suggested that upcoming models will solve that issue by supporting WiMax, LTE and CDMA. In any case, this transition would take from three to five years to complete.
The carrier plans to announce its decision around the middle of the year.
Before then, it may come to a second decision: whether to merge with T-Mobile. Bloomberg BusinessWeek reporters Serena Saitto, Jacqueline Simmons and Jeffrey McCracken wrote yesterday that T-Mobile’s corporate parent, Deutsche Telekom, is talking to Sprint about selling T-Mobile USA in return for a stake in the merged company.
A combination of Sprint and T-Mobile, with more spectrum at its disposal, might compete better with AT&T and Verizon. But it would still have to rely on those two firms and other land-based telecom firms for “special access” connections from cell sites upstream to the Internet. And it would have an even messier standards choice to make, since T-Mobile’s 3G runs on the GSM standard used in most of the world.
The Wall Street Journal’s Stephen Grocer quotes a handful of analysts who approve of consolidation but warn of complications. But their use of phrases such as “creating additional rationalization for the industry” and “the U.S. wireless industry remains plagued by an oversupply of carriers” suggests the obvious downside: less competition for each subscriber’s credit card when only three companies sell nationwide wireless service.
I think an LTE migration makes enormous sense for Sprint: That’s where the industry is heading, and if we can ever get all the carriers to adopt the same standard we will be a lot closer to keeping our phones when we change carriers. I’m not nearly as sure about the merits of yet another wireless merger. Sprint, having endured a long bout of indigestion after its Nextel merger, probably has similar doubts. How about you?