The nation’s third largest carrier announced that it had entered into a deal with LightSquared for 15 years that will be worth $9 billion for Sprint. The deal may bring the 4G LTE protocol closer to Sprint, which so far has been relying on the 4G WiMax standard through its partnership with Clearwire. Switching to 4G LTE may give Sprint the advantage of matching the speeds that are now offered to customers on Verizon Wireless and will be offered to AT&T customers in the future.
In the past, Sprint had remained vague about its LTE ambitions. When asked if LTE is in Sprint’s future, the carrier never shunned the possibility, stating that it was open to the standard and could theoretically support both rival 4G technologies.
The deal would potentially open the door for LightSquared to sell 4G service to Sprint subscribers and allow LightSquared users to roam on Sprint’s 3G network. Sprint can also have access of up to 50% of LightSquared’s 4G capacity.
It will probably take some time for both Sprint and LightSuared to begin offering 4G LTE to customers. The first 4G market will be deployed in 2012 and the two are expected to finish deploying the network by 2015, which would place Sprint’s LTE foray behind that of AT&T’s and Verizon’s.
Also, it’s unclear if Sprint’s motives for supporting LTE would stem from speculations about a 4G iPhone LTE in the future. As LTE becomes the dominant 4G protocol throughout the world, standardizing on LTE may give Sprint a better chance of getting an iPhone LTE in the future on its network. For now, while WiMax promises 3-6 Mbps on the download side, LTE’s faster network speeds of 6-12 Mbps on Verizon may be just as good an incentive for Sprint to utilize that standard to attract new subscribers.
In the past, there were concerns about LightSquared’s 4G LTE network. In early testing, it was discovered that LightSquared’s network had interfered with GPS reception, resulting in inaccurate positioning for nearby devices. LightSquared would need to optimize and fix its network before a rollout can happen to safeguard the accuracy of GPS for nearby devices, even those not on its network.
Sprint Nextel and LightSquared Announce Spectrum Hosting and Network Services Agreement
LightSquared enters into a Spectrum Hosting and Network Services Agreement with Sprint that is expected to result in substantial savings for LightSquared and accelerate completion of LightSquared’s nationwide 4G-LTE network
Sprint has option to purchase 4G capacity from LightSquared
LightSquared enters into a nationwide 3G Roaming Agreement with Sprint
RESTON, Va. & OVERLAND PARK, Kan. (BUSINESS WIRE), July 28, 2011 – LightSquared™, the nation’s first wholesale-only integrated 4G-LTE wireless broadband and satellite network, and Sprint Nextel (NYSE: S) announced today they have entered into a 15-year agreement that includes spectrum hosting and network services, 4G wholesale, and 3G roaming.
This spectrum hosting arrangement leverages Sprint’s investment in its innovative, multi-year Network Vision plan. Under the agreement, LightSquared will pay Sprint to deploy and operate a nationwide LTE network that hosts L-Band spectrum licensed to or available to LightSquared. As a wholesale-only carrier with separate core network operations, LightSquared can sell its 4G broadband capacity produced through this spectrum hosting relationship to Sprint, other wireless carriers, and retail partners.
Under the terms of the agreement, during an 11 year period, LightSquared will make payments to Sprint of approximately $9 billion in cash for spectrum hosting and network services as well as LTE and satellite purchase credits which are currently estimated to be valued at approximately $4.5 billion. The agreement also provides Sprint the opportunity to purchase up to 50 percent of LightSquared’s expected L-Band 4G capacity. The wholesale purchase credits will provide Sprint the option to obtain cost-competitive access to 4G capacity by offsetting Sprint’s purchases of 4G capacity from LightSquared, should Sprint elect to incorporate the L-Band LTE capability as part of its 4G offering.
This agreement is expected to lower network capital and operating expenses for LightSquared by more than $13 billion over the next eight years in comparison with the cost of a stand-alone network build. LightSquared expects the deployment of the nationwide 4G-LTE network to be completed more than one year ahead of the Federal Communications Commission (FCC) mandate to cover 260 million Americans by 2015.
LightSquared has also entered into a 3G nationwide roaming agreement with Sprint. With access to Sprint’s 3G nationwide network, LightSquared’s wholesale customers will be able to offer combined 4G/3G data services as soon as LightSquared launches its first 4G markets in 2012.
“This spectrum hosting agreement with LightSquared allows Sprint to more efficiently use its Network Vision platform,” said Steve Elfman, president of Network Operations and Wholesale for Sprint. “In addition to improving our cash flow, it provides additional options and flexibility in how we meet our customers’ future capacity needs.”
“This agreement gives LightSquared a rapid and cost-effective radio access network build,” said LightSquared Chairman and CEO Sanjiv Ahuja. “With our next generation satellite already operational and our independent core network build underway, LightSquared is now well positioned to meet the fast-growing market demand for wireless broadband services with its wholesale-only integrated 4G-LTE and satellite network.”
The agreement is subject to LightSquared’s obtaining resolution and FCC approval of certain interference issues involving terrestrial use of the L-Band spectrum.
“We believe LightSquared, in cooperation with the FCC and adjacent spectrum users, is taking proactive steps to address and resolve these issues in a timely manner,” said Elfman.