Cricket plans to tap Clearwire's not-yet-existent 4G LTE
Clearwire, sitting pretty as the only real wholesale game in town, signs up its second wholesale contract after Sprint.
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Cricket has signed on to use Clearwire's forthcoming 4G LTE network to augment its own next-generation deployment.
Cricket, owned by parent Leap Wireless, and Clearwire said today that they have signed a five-year wholesale deal. While Cricket is building a 4G LTE network across two-thirds of its own territory over the next three years, it will need Clearwire's wider reach and ability to relieve its own traffic load.
Clearwire is in a strong position as the only wholesale partner left in town after the implosion of LightSquared. Clearwire secured financing from Sprint Nextel--its largest customer and investor--and has seen its prospects change dramatically over the past few months. The Cricket deal only furthers that momentum.
Clearwire wants to be a neutral provider of wireless broadband, and hopes to not only supply capacity to other carriers, but different companies with unique products.
"We hope to be able to equip new and existing business models," CEO Erik Prusch told CNET. "Our deep spectrum not only allows scale, but allows us to have a competitive advantage."
Clearwire is sitting a healthy stash of spectrum even as other companies are looking to add to their own positions.
"We believe that Clearwire's spectrum has tremendous value and the realization of that value is contingent on the company signing additional wholesale partners," said Credit Suisse analyst Jonathan Chaplin.
For now, Clearwire's main priority is the planned move to LTE. The company expects to begin its deployment by the end of March and be at 5,000 cellular sites by the middle of next year. It needs only to perform software upgrades and minor equipment changes, allowing for a much speedier roll out than before. Prusch recently told CNET that the biggest cities with the most need for additional spectrum would get LTE early, which hints at crowded hubs such as New York and San Francisco getting first dibs.
Cricket, meanwhile, mainly serves rural cities with its prepaid service, leaving prepay rival MetroPCS to the larger cities.
"We believe this agreement with Clearwire provides us with an attractive option to supplement our own LTE build-out strategy and gives us the flexibility to access additional 4G capacity where needed as data-centric devices continue to become more popular," said Leap Wireless CEO Doug Hutcheson.
The deal shows Clearwire is making some progress in signing up customers beyond Sprint, which has largely been its only wholesale customer. With Leap locked up, analysts expect MetroPCS to follow. Prusch declined to comment on potential partners.
"We have always believed that our unmatched spectrum portfolio offers a compelling resource that can and will enable wireless operators to thrive in the 4G marketplace of the future," Prusch said.
The two companies did not disclose the terms of the agreement.
Clearwire certainly could use a few more wins. While the company has enough cash to fund its deployment through this year, the company could need additional financing next year. Prusch declined to comment about its plans for financing, saying only that he would provide an update during its first-quarter conference call.
Updated at 8:44 a.m. PT: to include a comment from the CEO and an analyst.