updated 07:45 am EDT, Thu July 28, 2011
Sprint makes 15-year pact with LightSquared for 4G
Sprint as part of its results confirmed its repeatedly rumored deal with LightSquared and gave a clue it might use LTE for 4G in the future. The terms of the 15-year deal will see LightSquared pay Sprint $9 billion over 11 years for use of its wireless spectrum and network hardware. In return, Sprint would have the option of buying up to half of LightSquared's 4G capacity on the L-Band, "should Sprint elect to incorporate the L-Band LTE capability," the carrier said in a strong hint.
For LightSquared, the payout is estimated to save over $13 billion for the next eight years by skipping some of the network buildout it would otherwise need to do itself. The company also made a blunt appeal to the US government by noting that it would beat the FCC's goals for wireless broadband and cover over 260 million subscribers by more than a year before a 2015 target.
Sprint's primary incentive would be to improve its cash flow after years of losses. Having an LTE provider already on its network would give it immediate access to LTE instead of having to pay for all of the deployment itself. LightSquared has also bought frequency access that would have been costly for Sprint to get directly through an FCC auction.
The move doesn't amount to Sprint upgrading to LTE, though the carrier is under pressure to make the leap itself. Sprint was the first to claim a 4G service in the US but now has one of the slower networks. Both AT&T and T-Mobile have pseudo-4G speeds with up to 21Mbps or 42Mbps versus Sprint's maximum 10Mbps. Verizon's network is the closest to true 4G in speed at 5-12Mbps in real life and 50Mbps-plus peak.
LTE wouldn't necessarily let Sprint users roam on 4G from AT&T and Verizon but would give the carrier similar expectations for performance and features as well as simplify making phones, tablets, and other devices with LTE built-in. Any carriers LightSquared supports through its wholesale networking would also have direct compatibility with their LTE services.