What I find fascinating about the fact that Sprint Nextel (NYSE:S) is preparing to introduce the Samsung Galaxy Nexus smartphone this Sunday is that this is such a twist on the way 3G was introduced a decade ago.
Pioneering operators often went begging for devices when they launched their first 3G networks. The infrastructure was there; the devices, not so much. Even the early launches of LTE were characterized by a dearth of LTE-compatible smartphones though USB dongles and hotspot modems were at the ready. Yet LTE smartphone availability ramped up fairly quickly, and now we have an operator with no major commercial LTE networks offering three LTE-compatible smartphones: the Samsung Galaxy Nexus, HTC Evo 4G LTE and the LG Viper.
What a change. Not only that, Sprint is promising 15 LTE devices by year-end, most of them smartphones
Of course, Sprint is in a unique position because it simply must seed the market with LTE as quickly as possible. For one thing, Sprint is terribly late to the 4G marketing game that Verizon Wireless, AT&T Mobility and T-Mobile USA have been successfully playing (T-Mobile is late to LTE as well, but it's done a fair job of playing the 4G marketing game with its HSPA+ rollout), so anything Sprint can do to get the word out that it's got LTE too is critical.
In the marketing world, it's a minor detail that Sprint's fancy LTE handsets don't have a Sprint LTE network to run on, unless one happens to be in Kankakee, Ill., or some other small market where Sprint has LTE service but won't admit to it. Sprint says it will launch LTE service in 10 large cities by mid-year, with six of those being Atlanta, Baltimore, Dallas, Houston, Kansas City and San Antonio. Unless you're in Texas, there's not much to get excited about. If Sprint manages to cover 123 million POPs with LTE by year-end, as it pledges, that will be more impressive.
In the meantime, a little obfuscation--intentional or not--can be immensely helpful if it creates confusion in consumers' minds, which is what any good marketing program does if a company doesn't have the same goods as its competitors. If the average consumer tells her neighbor that she just bought a sassy new LTE phone from Sprint, the neighbor will probably be happy for her because he likely won't know that the LTE functionality is pretty much meaningless and will be for quite some time. He might even tell her that it's nice she's finally gotten on the 4G bandwagon since his old Apple (NASDAQ:AAPL) iPhone 4 or 4S is so branded because it has included that "4G LTE feature" all along (even though it hasn't and doesn't).
Once it has its new networks up and operating, Sprint needs to quickly shift users to spectrally efficient LTE because the operator has drawn a line in the sand with its widely touted Sprint Everything Data plan, which offers unlimited data consumption for smartphones. In October 2011, Sprint did away with unlimited wireless broadband for tablets, netbooks, notebooks, USB cards and mobile hotspot devices. But Sprint does not want to restrict its smartphone users' data access because unlimited data is one of the few attractive benefits that it has to offer vis-à-vis the competition.
However, Sprint could be shooting itself in the foot with this approach, as it may be attracting the biggest data hogs of all, who are tired of being throttled or put on tiered plans by rival operators, which, in turn, are glad to be rid of them and their gigabit-consuming ways.
And let's not forget that Sprint is already throttling some of its smartphone users, but it does so through sub-brands Boost Mobile and Virgin Mobile, which consumers don't necessarily associate with Sprint itself. The cracks in Sprint's 3G network that are caused by increasingly heavy data usage are starting to show, and the operator needs to shift its biggest data consumers off of 3G and onto LTE pronto.
Sprint is benefiting by being a late arrival to LTE, because the LTE-compatible devices it needs are already available. This time around, it's the infrastructure that needs to catch up with the devices. At Sprint, the race is on.-- Tammy