Sprint changes terms of service to give WiMAX customers more flexibility to switch to LTE
Sprint Nextel (NYSE:S) made changes to its customer terms of service last month in preparation for the possibility that it could stop using Clearwire's (NASDAQ:CLWR) WiMAX network before some customers' terms of service are up. The carrier said it wants to provide WiMAX smartphone customers with more options to get them to switch over to its LTE network, which Sprint has been steadily building out since last July.
Sprint made the changes to its terms of service on May 22.
Under its revised terms of service, Sprint said it "expressly reserves the right to migrate" customers from its WiMAX service to Sprint's LTE service. "Reasonable advance notice" will be given to customers who might be impacted, and they will have several options: They can choose to finish their contract without WiMAX capability, they can deactivate their service without being charged an early termination fee, or they can transition to Sprint's LTE network. If a customer chooses to switch to Sprint's LTE service, they "will receive a free standard Sprint LTE-capable device and can maintain" their existing service plan, "if available." Sprint said it also may provide other offers that are separate from the transition option, and these offers will be subject to a new two-year contract per line.
"Sprint has not set any dates regarding discontinuing the WiMAX network," Sprint spokeswoman Jennifer Walsh told FierceWireless. "The change in contract language that took effect May 22 anticipates the possibility that we may be ready to begin decommissioning the WiMAX network before the end of some contracts for customers with WiMAX devices. The new language provides Sprint with the flexibility to give customers LTE devices so that their service is not interrupted."
While Sprint has not launched any new WiMAX devices on the Sprint brand in more than a year and a half, the carrier continues to sell existing stock from inventory, according to Walsh.
The disclosures come as Sprint is fighting Dish Network (NASDAQ: DISH) for control of Clearwire. Clearwire's board has recommended that shareholders vote in favor of Dish's proposal and not Sprint's $3.40 per share bid to take over the roughly 50 percent of Clearwire that Sprint doesn't already own. Sprint has said it is evaluating its options but that "all commercial agreements, including network and customer agreements, will be honored and enforced as it regards our ongoing relationship with Clearwire."
Under agreements Sprint struck with Clearwire in December 2011, Sprint is paying Clearwire a flat rate this year for unlimited access to Clearwire's WiMAX network. However, starting next year Sprint's payments to Clearwire will be based on Sprint's use of the WiMAX network. Sprint has access to Clearwire's WiMAX network through at least 2015.
Sprint focusing on its own LTE network, which it expects will cover around 200 million POPs by year-end. Clearwire has stopped expanding its WiMAX network, which covers around 135 million POPs.
Clearwire has said it plans to have 2,000 TD-LTE sites on air by the end of June on its 2.5 GHz spectrum and 5,000 TD-LTE sites on air by the end of December. Sprint intends to use those cell sites as an LTE offload network--Sprint has said, assuming it successfully acquires Clearwire by mid-year, Sprint can begin launching devices in the late third quarter that take advantage of Clearwire's TD-LTE network. However, those plans have been clouded by the fight for control of Clearwire.
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Article updated June 13 to clarify Sprint's stance on selling WiMAX phones.