Sprint, Clearwire May Help Drive LTE Convergence
Cooperation between Sprint Nextel and Clearwire on LTEshould help to bring two versions of that technology together, leading to increased device choices and roaming opportunities for subscribers in developed markets.
Sprint disclosed Wednesday that it has agreed to work with Clearwire to make the two carriers' LTE (Long-Term Evolution) networks work together. Sprint will turn to Clearwire for additional capacity to fill growing mobile data demand, probably beginning in 2013. Because the two carriers plan to use different types of LTE, they will need to make the two versions work together smoothly, a development that may have impact beyond the two U.S. partners.
Sprint and Clearwire currently share a WiMax network, with Clearwire as the operator and Sprint reselling services for its 4G phones and data devices. Both are moving on to LTE, the 4G technology with the most international acceptance, but they plan to do so separately. Clearwire plans to use TD (time-division) LTE, which uses the same band to send and receive signals, while Sprint will use FD (frequency-division) LTE, which uses two bands.
With a view to letting subscribers use both networks, the two companies have completed a non-binding memorandum of understanding to cooperate on technical issues such as what chips to use in devices, when and where to set up base stations and how to smoothly hand off data sessions. For subscribers, the two networks will have to look like one.
"It shouldn't be too much of a challenge, but still, it's not something that's ever really been tried before," said Monica Paolini, an analyst at Senza Fili Consulting.
The carriers' cooperation is likely to be good news for users of TD-LTE, which has strong momentum in China and India but not in the developed markets of North America and Europe, Paolini said. European carriers are looking to TD-LTE for future supplemental capacity after their current FD-LTE systems start to strain under growing demand, she said.
As Sprint builds its LTE business, it will need to line up mobile devices that can use both types of networks, as well as the separate frequency bands that Sprint and Clearwire are using. The carriers will also have to work out likely teething pains in making devices go on to the best network where both are available, Paolini said. One saving grace is that the LTE networks won't be carrying voice calls, which are even more sensitive to bumpy handoffs between networks.
This may help to prime the pump for dual-technology devices in the developed world, separate from the types of products being developed for TD-LTE networks in China and India. But the deal with Sprint is especially important for Clearwire, which otherwise would have had trouble getting a lot of devices made for its own services or wholesale deals with smaller carriers, Paolini said. Clearwire has already announced a partnership with China Mobile to help build a TD-LTE ecosystem.
To keep up with demand for mobile data over the next few years, Sprint has already laid out elaborate plans for a flexible new infrastructure and a partnership with satellite-cellular startup LightSquared, all of which is separate from its Clearwire relationship. But on Wednesday, Sprint finally described a continuing role for Clearwire beyond the companies' WiMax wholesale deal, which expires at the end of next year.
The promise of a continuing revenue stream from Sprint should help Clearwire raise the funds necessary to build its LTE network, for which the company has said it needs to raise about $600 million. But analysts said it's doubtful Clearwire will be able to maintain its own branded mobile service, called Clear. The company has been cutting back marketing efforts for several years under financial constraints.
Clearwire has already spent too much money selling a mobile data service that essentially competes against its wholesale partners, said analyst Chetan Sharma, from Chetan Sharma Consulting.
"Unless some boatload of money magically appears, it's unlikely that's a strategy they can pursue," Sharma said.