Rumor mill: Sprint's LTE launch perfectly timed for iPhone 5 debut

Sprint Nextel (NYSE:S) drastically trails the two largest U.S. mobile operators in terms of LTE coverage, but Sprint's LTE launch, combined with its marketing promise of unlimited data service for smartphones, may have it sitting in the catbird seat over the longer term.

Sprint launched its initial LTE service in Atlanta, Dallas, Houston, Kansas City and San Antonio on July 15. The Sunday LTE service launch was "what we were waiting for, to get enough of a footprint where we were proud of what we could put in front of a customer," Bob Azzi, senior vice president of Sprint's network, told the Kansas City Star.

Azzi cautioned that Sprint's new LTE coverage map should be understood to represent only "street" coverage, as substantial structures such as brick buildings may not have LTE coverage. But Azzi said Sprint will fill in LTE coverage over the next few months so it will more closely match the operator's broader 3G footprint.

According to Sprint 4G Rollout Updates, Sprint originally intended to launch LTE in markets only after it modernized 50 percent of sites in those markets under its Network Vision project. In order to meet its mid-2012 launch schedule, however, the site said Sprint "decided to move up launches sooner than 50 percent completion."

Sprint has been seeding the LTE device market prior to launching its LTE service by offering an LTE hotspot from Sierra Wireless and LTE-compatible smartphones that include the HTC Evo, LG Viper, Samsung Galaxy Nexus and Samsung Galaxy S III. Along with its initial LTE service launch on July 15, the operator also introduced a white version of the LTE-enabled HTC Evo for $199.99 with a new line of service or eligible upgrade and two-year service agreement.

Moreover, Sprint's LTE launch may be arriving just in time to take advantage of the rumored launch of Apple's (NASDAQ:AAPL) iPhone 5, which is widely expected to include LTE capability. Though pundits had expected the iPhone 5 to be announced in September or October, Know Your Mobile is reporting that a reliable industry source revealed the device will be introduced on August 7. In addition to having an LTE chip, the iPhone 5 is expected to be the debut device for the newest version of the handset's operating system, the iOS 6.

Sprint's commitment to unlimited data for smartphones could pay off if an LTE-compatible iPhone is unveiled.

"Unlimited plans will be more valuable for LTE than they were for 3G since LTE is a higher-speed technology and will easily cause subscribers to overshoot their monthly quota for tiered plans. In such a scenario, Sprint will remain the only national carrier to offer truly unlimited plans (T-Mobile throttles 3G speeds after a certain limit), which it can still use as a very effective ploy to lure subscribers away from the two larger carriers," wrote the team at stock analysis website Trefis, in a column for Forbes.

Earlier this month, Steve Elfman, Sprint's president of network operations, told Investor's Business Daily that the operator will offer unlimited data for the iPhone 5 "if we get it and when we get it."

Its unlimited data offering for smartphones combined with the fact that Sprint's earlier iPhone bet is starting to pay off has the operator nicely positioned going forward. According to Trefis, not only has the iPhone brought Sprint many new subscribers since the operator began carrying it in October 2011, Sprint also "was the least impacted by the seasonal slowdown in the U.S. iPhone sales last quarter as it activated about 1.5 million iPhones during the quarter, about 16 percent lower than the previous quarter."

That compared favorably against results from AT&T (NYSE:T) and Verizon (NYSE:VZ), which saw sequential declines of 43 percent and 24 percent, respectively, in iPhone sales.

Of course, Sprint's launch of LTE in five metro markets pales in comparison to Verizon's LTE coverage in 304 markets and AT&T's in 47 markets. Yet that may not be a huge disadvantage for Sprint, which promises to have most of its network LTE-enabled by the end of 2013, when some 250 million people will have LTE coverage. It appears Sprint still has some time to position itself as an LTE competitor, given that LTE adoption rates have not been spectacular so far, with market leader Verizon converting only 9 percent of its subscriber base to LTE as of the last quarter.

"As LTE adoption rates rise and the iPhone brings in the highly lucrative postpaid subscribers, we expect Sprint to see its data ARPU levels rise in concert. Sprint's unlimited LTE plans will meanwhile help it maintain its niche and differentiate from rivals at a time when wireless subscriber growth has nearly saturated," said Trefis.

Sprint LTE service will be backed up by its existing CDMA service, which is also being upgraded to offer faster speeds and few dropped and blocked calls through the operator's Network Vision project.

As Sprint's LTE network gains users, the operator intends to avoid resorting to cell splitting technologies in high-usage areas by leveraging wholesale partner Clearwire's (NASDAQ:CLWR) planned TD-LTE network. Clearwire hopes to deploy 5,000 of TD-LTE hotspot sites in 31 top-tier markets by June 2013 and is expected to name network suppliers sometime this quarter.

To date, Sprint has not publicly said why its Baltimore market was not included in its initial LTE launch. In February, when releasing its fourth-quarter 2011 results, Sprint added Kansas City and Baltimore to its list of planned LTE launch markets, but the latter was subsequently dropped from the initial LTE introduction. Ericsson (NASDAQ:ERIC) is the supplier of infrastructure equipment for all of the markets that launched on July 15, while Alcatel-Lucent (NYSE:ALU) is outfitting Baltimore.

According to Sprint 4G Rollout Updates, as of mid-June, 55 sites in Baltimore had received Network Vision upgrades and the market looked like it could be ready to launch sometime this month.

For more:
- see this Forbes article
- see this Kansas City Star article
- see this Phone Arena article
- see this Sprint release
- see this Sprint 4G Rollout Updates post
- see this Know Your Mobile post
- see this Wired article

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