Sprint Nextel said today it plans to aggressively roll out its own 4G LTE service next year as it looks to avoid falling behind in the network race.
Sprint plans to launch its next-generation network to cover 120 million people by the end of next year, and wrap up with coverage of 250 million people by the end of 2013. The company confirmed that 15 LTE devices will be available next year, with the first to launch by midsummer, CNET.
"There will be an aggressive rollout of LTE," Steve Elfman, head of network operations for Sprint, said during the company's investor presentation today.
By moving on its own, Sprint will be able to move to LTE--a newer and speedier wireless technology--quicker than if it relied on Clearwire, which currently furnishes it with an older 4G technology called WiMax. Clearwire has opted to make the switch to LTE as well, but it's still seeking financing for its upgrade.
Indeed, early during the presentation, Clearwire was never mentioned, with Sprint referencing only WiMax. Clearwire's stock retreated today. It wasn't until about two hours into the presentation that Sprint Chief Financial Officer Joe Euteneuer noted Sprint's relationship with Clearwire.
Clearwire "continues to be a value to us," he said, adding that there were no updates to the relationship.
But the crowd got testy as executives worked to justify Sprint's own 4G strategy and avoid commenting on whether it would provide financing to Clearwire, which many are concerned could eventually go under. Executives fired back at one speaker who questioned their strategy.
Sprint Chief Executive Dan Hesse earlier reiterated that the company has a two-year wholesale agreement that lasts through next year, but he didn't comment on what would happen beyond 2012.
"I'm not in a position to announce anything," he said on the sidelines of the event. He declined to comment on whether Sprint would provide financing if Clearwire gets in trouble.
Clearwire, meanwhile, said its relationship with Sprint remains intact.
"Sprint remains dependent on Clearwire for 4G, and nothing about today's announcement changes that," Clearwire said in an e-mailed statement. "Even with their re-allocation 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."
Sprint's LTE adoption is critical as it seeks to keep pace with Verizon Wireless and AT&T, which have both opted to deploy their own next-generation networks using the same technology. While Sprint had the edge for years with its WiMax service, its rivals have caught up and, in Verizon's case, surpassed it.
The announcement adds to a big week for Sprint. The company became the latest carrier to offer the iPhone, joining larger rivals AT&T and Verizon Wireless, when Apple unveiled its iPhone 4S on Tuesday. Elfman said he believes the network will be able to handle the increased traffic that comes with the iPhone.
Sprint's Network Vision plan is the key to its upgrade plans. It's an overhaul of the company's infrastructure, allowing it to straddle multiple network technologies, including its core 3G CDMA service, as well as Nextel iDEN service, which it plans to shut down in 2013. Beyond 4G, the company believes the upgrade will also improve the quality of its 3G service.
If Network Vision was available a few years ago, Sprint would be in a different position, Hesse said.
Will Power, an analyst at Robert W. Baird & Co., said he thinks "Network Vision is the right approach for Sprint."
Sprint plans to use 1.9-gigahertz spectrum as the foundation for its LTE network. It also has a network-sharing deal with LightSquared, a startup that will pay Sprint to host and maintain its own 4G network. The deal gives Sprint the option to use some of LightSquared's spectrum, but that's still contingent on LightSquared getting the proper approval for its rollout.
Euteneuer said that while Sprint would be supportive of LightSquared, the company hasn't made any decision about potentially providing financing to the startup. LightSquared has said it would obtain its own financing to build its network, which would potentially gift Sprint a boost in revenue.
Sprint plans to launch dual-band LTE/CDMA smartphones next year, as well as tablets and other 4G devices, said Fared Adib, head of products for the company.
Sprint plans to spend $10 billion over the next two years on capital expenditure, Euteneuer said. He declined to provide an estimate on the financial implications of selling Apple's iPhone, which brings high subsidy costs in the near term.
Clearwire's WiMax network has essentially hit its cap at 71 markets, and alongside the funding for its LTE upgrade, the company is also looking for further financing for its regular operations. Elfman said Sprint plans to continue selling WiMax devices through next year, while Hesse added he would continue to support devices longer than that.
By October 20, Verizon will have covered 164 markets in the country with its rapidly expanding LTE network. AT&T, meanwhile, has launched its next-generation service in five cities and plans to roll out more this year. It also has a souped-up version of its 3G network that it also calls 4G.
Updated at 8:01 a.m., 8:24 a.m., 8:50 a.m, and 11:08 a.m. PTwith an additional comment from Sprint's CEO and an analyst; background throughout; confirmed details of 15 devices next year; additional comment from Clearwire; details on capital expenditures for the next two years; and a response from Clearwire.
Correction at 8:01 a.m. PT:This story erroneously reported the planned extent of the 4G LTE coverage, owing to incorrect information provided. Sprint says 120 million people will be covered by the end of 2012, and 250 million people by the end of 2013.