Sprint CEO Claims Pole Position in Race to 4G
Page 1 of 2
|Sprint CEO Dan Hesse|
Speaking here at the National Press Club, Hesse told a packed ballroom that his company's investment in the WiMAX standard for a high-speed, fourth-generation (4G) network, which it took live in Baltimore last month, could give it the inside track to overtake larger rivals AT&T and Verizon Wireless.
Through each iteration of network enhancements, the wireless industry has seen its major players back competing standards in what Hesse called "religious wars." The race to 4G is no exception.
Sprint (NYSE: S), with the backing of tech giants such as Intel and Google, is launching full-tilt toward a nationwide WiMAX rollout in a $14 billion venture that involves the partial acquisition of former partner Clearwire. Verizon (NYSE: VZ) and AT&T (NYSE: T) are both working toward the competing standard known as LTE, or long-term evolution.
But while WiMAX networks are already under construction, LTE deployments may still be a couple years away.
"Sprint chose WiMAX for one reason: WiMAX is available now, and our customers want 4G now," Hesse said. "The Baltimore launch shows that the 4G's here, and that the speeds are real."
Much of the spectrum that Verizon and AT&T will use to build out their LTE networks won't become available until next February, when television broadcasts switch to an all-digital format. Combined, the two companies spent more than $15 billion to acquire that spectrum at the Federal Communication Commission's (FCC) auction earlier this year.
Sprint has been talking up the virtues of WiMAX for years, but took its greatest step to date with the Clearwire venture in May. Under the complex arrangement, Clearwire would be reconstituted as a nationwide WiMAX provider, with Sprint holding a 51 percent stake. The existing entity of Clearwire would take a 27 percent share, with Google, Intel's Intel Capital unit, Comcast, Time Warner Cable and Bright House splitting the remaining 22 percent.
The FCC is currently reviewing the deal, and the companies are expecting approval by the end of the year. For Hesse, the sooner that comes, the better.
"We intend to be the leader in wireless data, and being first with 4G was crucial for us," Hesse said. "So I think there's an advantage for us -- because, quite frankly, we're smaller than AT&T and Verizon -- to be first, and to be different."
"We see it as an opportunity to differentiate Sprint," he said.
The 4G network Hesse envisions will make possible all manner of bells and whistles, like a chip embedded in a car enabling parents to download a movie when the kids get cranky on a road trip. Or a dual-mode air card for a laptop that would automatically "downshift" from 4G to 3G when it traveled to an area where the WiMAX rollout hadn't yet arrived.
But building out a nationwide network isn't cheap. And while Sprint and its big-league partners bring considerable financial resources to the table, Hesse worries it might still might not be enough, especially when jittery investors take a magnifying glass to the company's balance sheet four times a year.
Asked what the next U.S. president could do to promote broadband access in rural America, Hesse replied, "Provide subsidies for WiMAX deployment," to peels of laughter and loud applause.
"I say that kind of half-jokingly," he said, noting the prohibitive expense of constructing a network across vast, sparsely populated regions of the country. "The economics don't work."
Page 2: Not a fan of Net neutrality laws; and will Sprint debut an Android phone?