Sprint's solo LTE plan leaves Clearwire in the lurch

The carrier is snubbing its own 4G partner and its wealth of spectrum, with a go-it-alone strategy

Sprint's decision to speed up deployment of an LTE-based 4G network leaves its 4G partner Clearwire alone to fund and build its own LTE network, signaling a divorce in the troubled partnership. Originally, Clearwire was going to build a WiMax-based 4G network -- and in fact installed it in a few dozen smaller cities three years ago -- that Sprint's mobile devices would use. (InfoWorld's tests at the time showed that WiMax performed decently.)

But as it became clear that no other carrier would adopt WiMax -- and few device makers would build smartphones for it -- Sprint and Clearwire regrouped, shifting to the LTE technology that Verizon is also deploying and that AT&T plans to do down the road, though their LTE 4G networks will not be compatible.

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Sprint said it expected its LTE network to launch commercially in the middle of 2012 and reach about 250 million U.S. residents by early 2014. The LTE service would use the flexible network that Sprint plans to build with Ericsson under its Network Vision initiative. Sprint has said the initiative will cost $4 billion to $5 billion, requiring it to find additional investors at some point.

But the plan announced today had no place for Clearwire. Sprint did say that it will keep to a wholesale deal the companies reached earlier this year, under which Sprint will pay Clearwire $1 billion through the end of 2012 for access to WiMax. The company will also keep selling WiMax devices through next year and support them even longer. But Sprint made no further commitments to Clearwire.

Without Sprint, Clearwire could be in a precarious position, said Monica Paolini, an analyst at Senza Fili Consulting. When Clearwire announced its own LTE plans earlier this year, the company said it would need to raise $600 million to build the LTE network alongside its WiMax system. "Clearwire can't go and market LTE without having a cell network or a strong partner," she said.

Clearwire defended its own prospects. "Sprint remains dependent on Clearwire for 4G and nothing about today's announcement changes that," Clearwire said in a statement. "Even with their reallocation of existing spectrum, it's obvious that their spectrum resources are insufficient to meet the long-term demands of mobile data, but this is not unique to Sprint. Data capacity will clearly stress the capabilities of the low-capacity 4G deployments of other carriers due to their spectrum constraints."

For Sprint's part, the Network Vision project is impressive technologically, but it will cost far more than adding LTE to Clearwire's network and expanding its reach, Paolini said. "It doesn't make sense to have two networks," she said.

More notable yet is the fact that Clearwire has a huge amount of radio spectrum, exceeding 100MHz in most cities, yet Sprint plans to deploy LTE using the frequencies it already uses for its 3G and 2G networks. The Network Vision technology is designed to do this gradually through software changes.

If the 3G network isn't being used to capacity now, Sprint may be able to move LTE into that band without affecting the experience of 3G customers, Paolini said. "They might have some more room to do this," she said. But it could leave Sprint with less spectrum than other major carriers have for LTE, she added. Sprint said it could gain access to some more spectrum through LightSquared, the hybrid satellite-LTE carrier that plans to run its service on Network Vision. LightSquared has yet to gain FCC approval to operate.

What started in 2007 as a partnership between Sprint and an independent Clearwire changed in 2008 whereby Clearwire became majority-owned by Sprint. And it's nothing new for the two companies to be out of sync. "The underlying motives are just as confused as ever," Paolini said.

For example, before reaching the wholesale deal announced in April, they negotiated for months over how Sprint should compensate Clearwire for its subscribers' use of the WiMax network. And before the joint venture was even formed between Sprint and the original Clearwire, a fixed wireless broadband provider, they reached one tentative deal in 2007 that fell apart within months.

One possibility is that Sprint is letting Clearwire's situation grow even more dire so it can buy out the rest of the venture at a favorable price, she said. If that is its plan, the fallout from today's announcement may represent progress.

Copyright © 2011 IDG Communications, Inc.

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