The news: From the moment Sprint Nextel (NYSE:S) announced its Network Vision network modernization project in December 2010, it seemed like a given that Sprint would use it to deploy LTE--the only question was when. Clearwire (NASDAQ:CLWR), in which Sprint holds a majority stake, also began hinting more strongly in the spring about adopting LTE in addition to mobile WiMAX. Indeed, though WiMAX had allowed Clearwire and Sprint to deploy "4G" first, Verizon Wireless (NYSE:VZ) took away the companies' first-mover advantage with its aggressive LTE deployment.
Sprint inched closer to adopting LTE by inking in late July a 15-year network-hosting deal with wholesale LTE provider LightSquared for $9 billion. Then in August Clearwire confirmed it would begin deploying "LTE-Advanced-ready" network technology in addition to maintaining its mobile WiMAX network--the catch was that Clearwire needed at least $600 million in additional funding to get its proposed TDD-LTE network off the ground.
Meanwhile, Sprint said in October that it would deploy LTE on its own 1900 MHz PCS spectrum by mid-2012. Inexplicably, Sprint's plans made no mention of Clearwire. Then, as Clearwire inched closer to defaulting on its debt payments, Sprint and Clearwire finally announced a series of conditional agreements worth up to $1.6 billion in total that bind the two companies more closely together and will allow Sprint to take advantage of Clearwire's LTE network once it is built.
Why it was significant: Sprint and Clearwire's decision to add LTE to their next-generation network technology portfolios was inevitable. The scale of the LTE ecosystem is too large to deny. In that sense, 2011 resolved the great network technology debate, and mobile WiMAX lost. However, Sprint and Clearwire's decision to hop on the LTE bandwagon also highlighted a new phase in the "4G" debate: the focus now shifts to the size, coverage, capacity and number of customers on LTE networks. Verizon now covers 200 million POPs with LTE, and despite high-profile LTE outages in April and December, Verizon has a clear lead in both LTE coverage and device selection. AT&T Mobility (NYSE:T) is trying to catch up, and recently said it remains on target to cover 70 million POPs with LTE by year-end. Even T-Mobile USA, which has no plans to deploy LTE, is trumpeting that its HSPA+42 network now covers 180 million POPs and provides speeds similar to LTE. The battle lines have shifted away from a theoretical debate on technology choices to a ground battle over coverage, capacity and subscribers in 2012.