Clearwire: Sprint's Next 4G Integration Headache?
Sprint Corp. (NYSE: S)'s $2 billion bid to buy its partner Clearwire LLC (Nasdaq: CLWR) is a clear grab for more 4G-capable spectrum, but integrating the two operators' separate networks will be no easy task.
Sprint is both Clearwire's majority owner and its biggest customer. Clearwire said in the second quarter that 9.6 million of its 11 million WiMax customers are wholesale customers. The vast majority of those are subscribers to Sprint's "4G Now" using dual-mode WiMax and 3G smartphones across 72 major cities in the U.S. (See What We Mean When We Say '4G'.)
Sprint, however, did not include WiMax support as part of its "Network Vision" plan for 4G Long Term Evolution (LTE) and 3G upgrades. (See Sprint: SoftBank Will Not Change Network Vision.)
"The current Sprint base stations do not support WiMax," a Sprint spokeswoman confirmed to Light Reading Mobile Thursday.
This means that Sprint -- and its would-be majority owner, SoftBank Mobile Corp. -- have some decisions to make if the operator succeeds in its bid for Clearwire. Sprint's options include:
- Incorporating the existing Clearwire WiMax network coverage in a further phase of its Network Vision upgrade and then reusing the spectrum for future Sprint 4G.
- Operating WiMax as a separate standalone network, then moving planned future 4G LTE TDD support to Sprint. (See Defining 4G: What the Heck Is LTE TDD?)
- Operating the Clearwire WiMax and LTE TDD networks entirely separate from Sprint. (See Clearwire Goes It Alone With Faster 4G.)
"The most likely outcome will be to do a similar Network Vision-like project to migrate Clearwire's existing WiMax network to LTE," suggests Technology Business Research Inc. (TBR) analyst Chris Antlitz in an email reply to questions. "This would require ripping out and replacing WiMax base stations with multimode LTE RAN (the same kind Sprint is using to ensure seamless operation with Sprint's current network) and refarming that spectrum to work on the LTE network. This would give Sprint the greatest opex efficiencies and provide a huge bandwidth boost to its network. Operating two different networks simultaneously is not a prudent idea, as we saw with Nextel, so Sprint will be looking to converge both networks as fast as possible."
Heavy Reading analyst Berge Ayvazian notes that Sprint has a provision for the support of Clearwire's 2.5GHz-2.6GHz frequencies in its Network Vision requirements. He tells us, however, that it is much too early for Sprint to have deployed any LTE TDD radios yet.
In fact, as things stand, Sprint and Clearwire have completely separate networks and only Samsung Corp. in common as a vendor. None of Sprint's other Network Vision vendors -- Alcatel-Lucent (NYSE: ALU) and Ericsson AB (Nasdaq: ERIC) -- even support WiMax, although both are working on LTE TDD (aka TD-LTE).
So Sprint has several potential options to examine if and when it comes time to take Clearwire into the fold.
"Keep in mind that Softbank could influence this vendor selection and best practices on network integrations," suggests Ayvazian. "But the potential loser here could be Huawei Technologies Co. Ltd. -- which may be cut off from the Clearwire TD-LTE network rollout by Sprint." (See Clearwire Will Keep Using Huawei.)
The Sprint spokeswoman wouldn't comment when we asked about future integration plans for Clearwire.
- Sprint Wants to Buy Clearwire Outright for $2.1B
- Sprint in Talks to Take Over Clearwire?
- Sprint Buys Back Controlling Stake in Clearwire
- Softbank to Pay $20B for 70% Sprint Stake
- Clearwire Targets 31 Cities for LTE TDD
— Dan Jones, Site Editor, Light Reading Mobile