Thursday, October 18, 2012

Why the Surprise over Sprint Controlling Clearwire?

There are people in the media and the industry who are astounded that Sprint would enter into control of Clearwire, especially with the history of friction at the executive levels.  To be sure, Clearwire and Sprint have been on their respective rollercoasters but the relationship is symbiotic and beneficial in the long term.  

Clearwire's value proposition is its spectrum depth. Though it seemed to be handicapped with the funky non-standard 2.5 GHz band and more TDD than the standard FDD, this has turned around for the better.  What's good?

  • The spectrum depth allows Sprint to continue to offer an unlimited proposition. It does so now using WiMAX technology under a flat-rate contract with Clearwire. When TD-LTE comes, the current thinking is to address 'high tonnage' markets for data offloading from the Sprint 5 X 5 channel PCS LTE network.
  • Having TDD spectrum can be advantageous. You can devote more channels to the downlink. Most of the data consumption is on the downlink anyway whether it's mobile or fixed.  Under a FDD scenario, the bands are usually the same 'width.'  If there isn't a lot of uplink traffic, it feels like it's less efficient.  
  • That funky band (sometimes a little variation - 2.6 GHz (close)) is now positioned to be a global LTE roaming band with presence in Asia and Europe.
If purchasing Clearwire wasn't an overt condition of the SoftBank deal, it should have been logical given the speed ambitions of Mr. Son. Allowing a non-fully controlled Clearwire can upset that plan.  The Clearwire takeover scenario would never have come into play with out the SoftBank acquisition. Sprint was in no financial position to further outright fund Clearwire as it was busy with its own turnaround execution.  

Network Vision Looks Better

Bob Azzi (Sprint's public face for Network Vision) must be relieved.  When Network Vision was conceived, it was pre-built with spectrum hosting/network sharing in mind.  Although LightSquared signed on, their business model went south due to GPS interference.  The Sprint conceived 2010 Network Vision graphic below kind of blatantly put the 2.5 GHz band out there even though Sprint didn't own the band.
Meanwhile Clearwire was expanding on its own WiMAX network in specific markets with expansion encumbered by CapEx and customers to help with that pesky revenue thing.  Throughout Network Vision, analysts including me, expected that Clearwire would jump on board. But they didn't.  Some point to money, some point to independence but the end result is that Clearwire was not on the Sprint Network Vision bandwagon.  This may have changed as Clearwire and Sprint worked out their TD-LTE deployment priorities. Sprint desires specific markets that Clearwire had no network, the Sprint Network Vision platform would be the natural choice rather than spending the CapEx on a parallel network.

What Could Be: If there is enough money (thanks SoftBank), Sprint and Clearwire can be more aggressive in TD-LTE expansion, going to more geographic markets than planned (constrained). Sprint's slim PCS-based LTE won't have that spectre of capacity challenged.  Moreover, more channels (and maybe hardware and backhaul and....) can be thrown to not only address capacity but also speed, addressing Mr. Son's fast mobile speed experience expectation.