“Our 4G strategy is WiMAX, full stop,” said Dan Hesse, CEO of Overland Park, Kan.-based mobile phone company Sprint (s S). In an interview, Hesse, a 33-year veteran of the telecom industry, said people should ignore all the talk about Sprint switching to LTE.
In this second part of a three-part interview series, Hesse addresses Sprint’s next-generation wireless broadband options, the future of Clearwire (s CLWR) and what it plans to do with the spectrum that will free up when the company eventually shuts down Nextel’s iDen network.
“When we had the opportunity to move into 4G, WiMAX was the only 4G interface, and it was perfect with the spectrum we owned (2.5 GHz),” said Hesse. That early move gives his company an advantage over its competitors, which are going to be rolling out their 4G networks later this year or next year. “We moved to establish the network because we didn’t want to wait, and we believe that being first to the market is an advantage.”
Sprint later merged its spectrum with that of Clearwire (s CLWR), which now provides the 4G pipe. So what about these LTE trials being run by Clearwire? “We have so much spectrum that we decided to do tests so in case we have multi-modal phones with other air interfaces, we can add LTE on top of WiMAX and run both networks,” he said. “We have not announced a decision to put LTE anywhere in our network, and we are not intending to. Our 4G strategy is WiMAX, full stop!”
“We had seven seats on the Clearwire board,” he said. The company hasn’t given up those seats, but instead it is opting to replace three of its executives with either different members of
its management team the Sprint board or independents. This is driven primarily by a recent legal ruling (American Needle v. NFL) pertaining to other parties. Hesse was pretty clear in letting me know who was the boss when he said, “We own 54 percent of Clearwire.”
“The greatest single asset Clearwire has, more than any other [wireless] company is the spectrum it owns, and it is its greatest competitive advantage,” said Hesse. “So they should hold on to that spectrum in my view.” People shouldn’t read too much into Clearwire testing the option of selling its spectrum to raise capital to continue building their network. “My own view is that they won’t be doing that.” I wonder if Clearwire has any other choice? The company has billions of dollars in debt coming due next year. It will either have to hit the public markets again or have Sprint (and other current investors) pony up more dollars.
Sprint is also looking to re-deploy the spectrum that will be freed up with the eventual shutdown of the Nextel iDEN network. “2G will eventually come to an end. CDMA will come to an end. GSM will come to an end and iDEN will come to an end,” he said. “Over time, as fewer customers are using our 2G networks, we can use that spectrum for the CDMA/EVDO network.” Since iDEN is deployed in the 800 MHz spectrum band, it has good propagation qualities, especially inside buildings, so putting CDMA/EVDO on it makes sense, especially for voice-oriented services. Sprint’s current network runs in the 1900 MHz band. There’s no time line for this shift, but Nextel subscribers — 6.1 million at the end of third quarter of 2010 — are on the decline, and it won’t be long before Sprint starts to move.
In Part III of this three-part interview, Hesse talks about M2M communications and the future of telco. In Part 1 of the interview, he talked about smartphones and tablets like the iPad.
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