NEW YORK--Sprint Nextel (NYSE:S) will launch LTE service by mid-2012 using its 1900 MHz spectrum, an expected move away from WiMAX as its 4G technology of choice. The switch to LTE is the most significant part to date of the carrier's Network Vision network upgrade.
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At an investor conference here, Sprint executives detailed the company's 4G strategy and the timeline for the switch. Sprint will launch FDD LTE service on its 1900 MHz PCS spectrum by the middle of next year. The executives reiterated many of the benefits of Network Vision, which centers around multi-mode base stations that Sprint argues will enable it to lower costs and support multiple technologies on one network. Sprint CEO Dan Hesse said Network Vision will help improve the customer experience, reduce costs, allow Sprint to better use its spectrum assets and will give the company flexibility and sustainability.
LTE deployment and Network Vision
Steve Elfman, Sprint's president of network operations and wholesale, said that Sprint will undertake an "aggressive" rollout of LTE, and that the carrier's first LTE markets will be turned on by mid-2012. Sprint's LTE buildout will be largely complete by 2013, he said.
Bob Azzi, Sprint's senior vice president of networks, said that by the end of 2012, Sprint will cover 176 million POPs with 4G, a figure that includes 123 million LTE POPs, 120 million WiMAX POPs and 67 million POPs that will overlap. He said by the end of Sprint's Network Vision deployment at the end of 2013, Sprint will have 250 million LTE POPs covered and will continue filling in smaller markets with LTE at the beginning of 2014.
Sprint's initial LTE deployment w ill be in the G-Block of the 1900 MHz band, where Sprint has a nationwide 5X5 MHz block of spectrum, Azzi said. He said Sprint's G-Block spectrum will be combined with other 1900 MHz spectrum for its LTE service, and that the carrier currently has an average of 20-25 MHz per market nationwide in 1900. At some point in the future, Sprint also plans to use its 800 MHz for LTE; the carrier currently uses 800 MHz for iDEN but will begin moving those customers off that spectrum by 2013.
Sprint also plans to deploy CDMA 1X voice service in its 800 MHz spectrum and move CDMA traffic off its 1900 MHz spectrum. However, Sprint plans to decommission its existing iDEN service on its 800 MHz spectrum beginning in 2013. To get more capacity, Sprint also plans to introduce Wi-Fi offloading this quarter as well as new femtocells and optimization technology.
Sprint CFO Joe Euteneuer said the company plans to spend around $10 billion in 2012 and 2013 on deploying Network Vision and LTE as well as maintaining its legacy wireline and wireless operations. At the same time, he said Sprint will save $10 billion to $11 billion in operating expenses and capital expenditures from 2011 to 2017, including $4 billion from shutting down iDEN service.
Azzi said LTE markets will be turned on in "clusters" and not all at once, so some customers will get the benefits of Network Vision as the deployment progresses. Azzi said the speeds of Sprint's LTE network will be greater than those provided by the WiMAX network, which network provider Clearwire (NASDAQ:CLWR) and Sprint advertise as delivering average downlink speeds of 3-6 Mbps. Azzi said there will be a seamless handoff between CDMA and LTE on 1900 MHz and that "where we have 3G coverage we'll have 4G coverage."
The Sprint executives noted the base stations will enable Sprint to support multiple technologies in multiple spectrum bands. Sprint is also moving iDEN customers to advanced CDMA push-to-talk service on its 1900 MHz spectrum, which Sprint said offers improved in-building coverage and will triple the square-mile reach of its current iDEN-based PTT service.
Sprint will continue to use 1900 MHz spectrum and 800 MHz spectrum, which is currently being used for iDEN service, through 2014, Elfman said. Elfman and Azzi both noted that Network Vision's multi-mode base stations, which are being provided by Alcatel-Lucent (NASDAQ:ALU), Ericsson (NASDAQ:ERIC) and Samsung at a cost of $billion to $5 billion, will bring numerous benefits.
Devices
The first 1900 MHz dual-mode CDMA/LTE devices will be available also by mid-2012, and Sprint will continue to sell WiMAX devices throughout 2012 as well. Sprint currently resells mobile WiMAX service through Clearwire, in which it holds a 54 percent ownership stake.
Fared Adib, vice president of product development at Sprint, said the company will partner with Qualcomm (NASDAQ:QCOM) on multi-mode chipsets for its new LTE devices. Adib said Sprint will launch 15 CDMA/LTE devices in 2012, including smartphones, tablets and data cards. He also said CDMA/WiMAX/LTE devices will only be launched as mobile hotspots.
Adib also said HTC, which created Sprint's first CDMA/WiMAX phone, the Evo 4G, also plans to deliver LTE devices to Sprint. Motorola Mobility (NYSE:MMI) will also release LTE devices for Sprint, according to Motorola CEO Sanjay Jha, who delivered a video message at the conference.
LightSquared and Clearwire
Elfman said Sprint may get access to LightSquared's 1.6 GHz L-Band spectrum, but he noted that the FCC is still reviewing whether to approve LightSquared's network plans. Sprint and LightSquared entered into a 9-year $15 billion network hosting arrangement in July in which LightSquared will use Sprint's Network Vision architecture, but LightSquared is currently mired in concerns that its network will cause interference with GPS receivers, and the FCC has mandated more tests of its network. Sprint has the right to terminate its deal with LightSquared if the FCC does not grant approval by the end of 2011.
Notably, Sprint executives did not say the company will provide new funding for Clearwire. Clearwire has said it needs to raise between $150 million and $300 million for the maintenance of its existing WiMAX network and $600 million to begin rolling out LTE-Advanced network technology. Euteneuer said that Clearwire remains a strategic partner and Sprint will continue to try and help Clearwire going forward, but that no decisions have been made. Hesse noted that Sprint and Clearwire have a $1 billion wholesale relationship that runs through the end of 2012. Hesse said that if Clearwire ever did face a potential bankruptcy, he would expect Sprint to be involved, but that Sprint does not have insight into Clearwire's finances and that no wireless bankruptcy has ever resulted in customers losing service.
LTE competition
The main thrust of Sprint's argument centered on the benefits of Network Vision and how it will enable Sprint to achieve parity with other carriers deploying LTE. Other carriers are already moving rapidly ahead with their own LTE deployments.
Verizon Wireless (NYSE:VZ), which first launched LTE service in December 2010, said its LTE network now covers more than 160 million POPs, which is more than half of the U.S. population. The network is available in 143 markets, and Verizon expects to cover 175 markets and 185 million POPs with LTE by year-end. Verizon plans to cover two-thirds of the U.S. population by mid-year 2012 and cover its entire 3G footprint with LTE by year-end 2013.
AT&T Mobility (NYSE:T) launched LTE last month in five markets--Atlanta, Chicago, Dallas, Houston and San Antonio--and plans to cover 70 million POPs in 15 markets by year-end. AT&T has said its LTE deployment will be complete by 2013. However, the company's LTE deployment plans could be complicated by whether the Department of Justice wins its case to block AT&T's proposed $39 billion acquisition of T-Mobile USA. AT&T wants to acquire T-Mobile's spectrum and network resources to deploy LTE to 97 percent of the U.S. population.
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