So with Sprint's recent announcement, let’s look at their 4G strategy:
- Trying to be first to market, Sprint moved into a partnership with Clearwire for their WiMAX service. This was supposed to drive subscriber growth, with fancy adds on real-time mobile video collaboration. No such luck.
- Sprint now decides that maybe WiMAX is not the answer and that an LTE strategy for 4G is key. Even Clearwire starts LTE trials after having spent billions of dollars on WiMAX systems.
- Flailing a bit, Sprint decides that some sort of deal with the emerging wholesale provider, LightSquared, would do the trick: http://news.cnet.com/8301-1035_3-20084472-94/sprint-lightsquared-unveil-network-sharing-deal/
On first glance the LightSquared deal looks great. Sprint gets over $10
billion to build out the network for LightSquared to help build out the network
and “host LightSquared’s spectrum” and other considerations. However, in the same article, Sprint is
leaning on Clearwire’s 4G strategy and at the same time going to release their
larger LTE strategy later in the year.
Sprint also said that they really want the GPS issue with
LightSquared’s use of the MSS spectrum to be resolved. Well, that may not turn out so well, and
Sprint is again back to zero with $10 billion less in its pocket
.
Well, we now see the effect of such a coherent strategy:
Verizon has 190 LTE markets in production, AT&T 26, and
Sprint has a mid-year launch in 10 cities.
So, with all the money exchanged, all the early market entry
hype, and the potential financial gimmickry of the LightSquared deal, the
bottom line is that Sprint is in definitively last place in the 4G saga (oh,
there is the HSPA+ of T-Mobile).
What's even more confusing is that Spring announced that their first new 4G LTE site is a multimodal WiMAX/LTE site somewhere in New Jersey. No lesson is lost on Sprint (also previously discussed about Nextel), they need to support:
- Motorola iDEN (there are still Nextel customers out there?)
- 3G CMDA
- LTE
- WiMAX
The extra hardware, software, systems, planning, people, and operational issues around supporting a laundry list of service agreements and technologies makes it harder for Sprint to be competitive.
If they had a nimble, focused, catch-the-big-guys (i.e., AT&T and Verizon) strategy, it just does not look like it's going to work out.
Moreover, investors have been led down a garden path to
losses:
- Since the beginning of 2009, the Dow Jones Industrial Average is up approximately 40%:
- Clearwire is down around 70%
- LightSquared, depending on the FCC, may be effectively dead (not a public company, but what's an investment worth if you can't have customers?)
- Sprint is a big 0%
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