Since Sprint announced it would End-of-Life its WiMAX smartphones and partner with LS2 many board members and even some tech journalist have been completely mystified. They can't understand how it is more attractive for Sprint to invest near $10B to build LTE on its own spectrum, or that of other partners, than to give CLWR the $600 million it "says" it needs to build out LTE.
First one needs to understand what CLWR said could be accomplished for $600 Million. CLWR would deploy LTE capability in select high-trafficked "hotspots" of only about 70% of its roughly 70 markets. Therefore what would actually get LTE service would be "hotspots" on some cell sites within 40 markets. Further when CLWR deploys a market and includes the entire local population in its POPs calculation the numbers are misleading, one could say inflated, because with the Near-Line-Of-Sight properties the spectrum has there are numerous service dead-zones in the "covered areas" and in reality only about 60% of the population at any given time can get a reliable signal. This is what lead reporters to describe CLWR's WiMAX service as "spottier than a kennel of dalmations". CLWR has not fixed this in its current WiMAX markets and it wouldn't be fixed with LTE either without billions more invested in the current service footprint.
So what benefit is there to Sprint as carrier to have limited LTE "hotspot" coverage in roughly 40 markets? The answer is very little. Limited "hotspot' coverage in 40 markets is more like an extended technology demonstration.
Now look at Vz's and AT&T's LTE network build-out plans. They both are racing to deliver LTE service in the range of 200-230 markets and that's what it takes to be a member in the top tier carrier category. And FYI, both companies are remaining top tier carriers and not offering full "unlimited" service - which doesn't really exist anyway and consumers have shown isn't a requirement.
So what would it really take to build-out CLWR with LTE with a network that could rival Vz's or AT&T's in coverage? Just to cover CLWR's current WiMAX footprint in 70 markets and not just "hotspots" could have a price tag of the $3 billion range. Now extrapolate this to 230 markets, many which cost more per POP to build, and one is quickly in the $12-15 billion range. These are the kind of numbers Sprint has had to compare to its own Network Vision plan, not the $600 Million number CLWR threw out to the public that would give Sprint less capability than what they already have with CLWR's WiMAX network.
Sprint's Network Vision plan looks attractive compared to the CLWR alternative and probably equally important to Sprint's management it won't have to fight with a subsidiary over how to run their business.
Good points: VZW an d AT&T have spent several billions on fiber optic back-haul and core IP network build outs over the past three years. Sprint is now going out for contracts to do the same. The 1st round of base station upgrades apparently has been done but two more contracted stages of upgrades will be undertaken over the next ~12 months. I don't know what the cost of that will be but it has to be at least into the several hundred millions if not $1-3 billion. The way S is going about this makes sense and should result in lower costs than what I understand AT&T has spent. I don't know the comparables for VZW.
In any case, Sprint has a lot of conversion work left and not enough spectrum to deliver the unlimited/higher bandwidth competitive alternative. They must use 2.6GHz - there has never been an alternative to that. LS, or DISH won't change that. The cable companies could help out the spectrum situation for Sprint but they would use what they as their service expanded into widespread use... Sprint won't make a lot of gravy leaching off of the cable or satellite/MSS companies AWS spectrum. DISH has a narrow (5MHz) of 700MHz spectrum and maybe something could be put together by combining that with Qualcomm's 6-12MHz in 700MHz band. However, in every case the holders of that alternative spectrum will not want to be cheap wholesalers and will likely come to use all they have, and the more that they can get in order to grow the broadband media use they would focus.
Clearwire's situation is tenuous because it is very easy to imagine that nobody will partner with them or come to their financial aide. From a contribution of capital or revenue perspective, Clearwire has largely failed at partnering outside of Sprint. So why should anyone think they will succeed going forward? ..Because the situation is much different.. going into 2012. Sprint will not move away from use of 2.6GHz. That is different than saying they have no need to partner with others for access and development of other bands. Sprint is well advised to pursue partnering that can bring in capital and use of lower frequency spectrum.. anyone who says otherwise is obviously just nuts.
If Sprints buildout includes moneys and spectrum from LS2, then without LS2, the buildout estimates are missing necessary additional spectrum and cash projections and are way understated. Sprint is skating on very thin ice. This mistake could be fatal for Sprint.
Sprint blew it by not reaching a "win-win arrangement with Clearwire," according to Moody's.
IMO, Hesse's ability to turn Sprint around is over estimated. Does he not know Sprint owns 1/2 of CLWR?
... the rate of speed at which these networks are filling up. I-phone 4s's updated processor will just speed that up even more.
Look at the reason MetroPCS is even considering Clearwire... to offload volumes in their heaviest POPs densities from what I'm reading... which is where Clearwire's infrastructure is concentrated and built densely to boot in order to compensate for propagation needs at 2.5ghz. It was expensive to build to that density but now that it's done, their resulting cell radiuses also give them oodles of capacity in addition to what the ability to deploy mulitple channels also provides.
There is much about what PCS is likely considering about CLWR that goes beyond the benefits the merger might produce.
but many have said metro won't make a move till they see what happens with tmobile and att merger.
but something's gotta give in this race against time for clwr, I highly doubt clearwire insider and highside would have double down with this uncertainty.
something, or someone has got to be in the works.
... as the lack of expenditures has put sprint further behind Verizon and AT&T. Any surge in volumes from I-phone could reveal significant cracks in sprint's infrastructure and hit them with further losses which, combined with a N.V. related surge in 2012 cap-ex, could put them so far behind VZ/AT&T financially that i-phone would be irrelevant to their future.
If sprint experiences a spectrum crunch (which appears to already be developing) and Lightsquared enters 2012 with swarms of legislators biting their heels, something will have to give and MetroPCS could end up being the guiding light to spectral sanity.