In the LightSquared debate, we see LightSquared fighting to make it sound as though its network will not interfere with GPS receivers. I have to wonder whether Clearwire, which is in financial trouble yet again, could have signed the deals LightSquared has been able to sign to resell LTE on the Clearwire network. The landscape could look a lot different if Clearwire had switched to LTE sooner.
Clearwire has more spectrum than LightSquared, it has cell sites deployed covering more than 100 million potential subscribers (also known as POPs), and it has a deal with Sprint (which owns 54 percent of Clearwire) and others that are reselling Clearwire's WiMAX service. But Clearwire doesn't have enough devices and it picked the wrong technology as I have pointed out multiple times over the past few years.
If Sprint and Clearwire had made the switch to LTE a year ago, although it is based on Time Division Duplex (TDD), I believe they would now be reaping the benefits of this move. Most likely both would have been able to sign the resellers that have signed with LightSquared, device vendors would have come forward, Clearwire could have made a comeback, and LightSquared would be out of business.
So what is the way forward for Clearwire and Sprint? They have a few options that I can see. First, when Dan Hesse speaks in New York in a couple of weeks he is expected to announce that Sprint will endorse a move to LTE using its portion of the 2.5-GHz band and the TDD flavor of LTE. This could be the start of a conversion that Clearwire will adopt as well, assuming it can find some money to do so. Given my belief that Sprint will move to LTE (the press has been full of rumors to that effect), and Sprint's network upgrade was planned to enable running either WiMAX or LTE or both at their cell sites, I think this is the most likely outcome.
Sprint already has a deal with LightSquared to build the LightSquared network, if it ever gets built, and it would not take much to modify the contract to include making use of the Sprint LTE network as it comes online. LightSquared would save money, but its business model would be tougher. It would have to find a way to make the economics of reselling Sprint's network to the customers it has already signed up and the margins would be slim at best.
Sprint and Clearwire are selling WiMAX devices and it would not take much for them to be updated to LTE-TDD, and more vendors would be likely to build devices since one of the largest markets in the world, China, is pushing TD-LTE as it is know there, for one of its three network operators. As LTE is rolled out around the world there will be more TD-LTE networks built and the more of them that are built, the more devices will become available. Remember that the Qualcomm chipsets support both flavors of LTE (Frequency Division Duplex, FDD) used by most network operators around the world, and TDD LTE.
Another option would be for Clearwire, Sprint, and LightSquared to form a partnership to work with the network operators that have already signed up with LightSquared and for them to find a way to provide wireless wholesale services to these companies. This could be a complex way of making this all work. Another way to do this would be to have Sprint buy the rest of Clearwire, and purchase the assets of LightSquared (perhaps minus its spectrum holdings). This would result in a larger Sprint, with more spectrum, that could move forward with its own LTE deployment fairly quickly.
Today Sprint does not have a lot of options with Verizon Wireless building out its LTE system quickly and now AT&T on the move with LTE. Clearwire and Sprint could end up losing customers to Verizon and AT&T over the course of this next year. All of the tests I have seen show that LTE is faster and has more capacity available per cell site than WiMAX, and WiMAX development has slowed to a crawl around the world. Continuing to support WiMAX puts both Clearwire and Sprint in a difficult position and it is time for them to quickly move into LTE.
If LightSquared loses its battle to be able to build out its spectrum, its assets become worth a lot less to someone else. Even if it wins the battle and is permitted to build its network, being limited to 10 MHz (5X5 MHz) for an LTE network, the amount of bandwidth available to LightSquared for resale purposes, will not meet the demand of those that have already contracted for service. Very quickly after launching its network LightSquared will be faced with a spectrum shortage and it is doubtful that the FCC will ever permit it to operate on its upper 10 MHz of spectrum because the first GPS/LTE tests proved that there was substantial interference to GPS receivers.
The timing for completing a deal is critical for LightSquared. If it waits until the FCC denies its network license, the value of its spectrum (which it did not pay for to begin with) and the value of its reseller contracts goes down considerably. Those that have contracted with LightSquared will be left at the altar and, of course, its investors end up with a company that is not worth what it could have been.
Clearwire needs money, LightSquared needs a contingency plan, and Sprint has a viable cellular business. These companies need to put all three pieces together into a larger, more robust company. It appears to me that the sooner Clearwire and Sprint announce they are moving to LTE, the sooner LightSquared comes to the realization that it is pushing a rope uphill and the sooner the three companies can sit down at the table and come up with a plan that works for all of them and their stockholders and investors. Or perhaps these discussions are already underway; it would be prudent for all three companies if that were the case.
Andrew M. Seybold is an authority on technology and trends shaping the world of wireless mobility. A respected analyst, consultant, commentator, author and active participant in industry trade organizations, his views have influenced strategies and shaped initiatives for telecom, mobile computing and wireless industry leaders worldwide. www.andrewseybold.com.