RESTON, Va.—Sprint Nextel Corp. will use WiMAX technology for its 4G network and utilize its wealth of spectrum in the 2.5 GHz band for a rollout that is slated to begin in the fourth quarter of 2007.
The carrier announced it will work with Motorola Inc., Intel Corp. and Samsung Electronics Co. Ltd. to develop the network and chipsets. One key element of the strategy is to have the chipsets embedded in a variety of consumer electronics devices. During a conference call with analysts, Sprint Nextel Chief Executive Officer Gary Forsee described chipsets potentially being embedded in portable game stations, video cameras, MP3 players and vehicle navigation systems to provide wireless connectivity for those items—and potential new revenue streams for Sprint Nextel.
“We will connect consumer to consumer and business to business,” Forsee said.
Barry West, Sprint Nextel’s chief technical officer, added that the company expects to see a lot of user-generated content, such as live video feeds from one consumer’s device to another, shipped over its 4G network.
Forsee declined to talk about how Sprint Nextel’s announcement might affect the bidding of its joint venture with four cable companies; the JV put up the second-largest upfront payment for the spectrum auction, which is set to begin tomorrow. However, Forsee did note that the JV is getting ready to put converged service offerings out in seven trial markets during the third and fourth quarters of this year and that the cable companies have “a path to 4G. They’ve been very much aware and involved in our 4G planning at the technical level and the business model level. … Cable has been very involved.”
Sprint Nextel’s 2.5 GHz spectrum holdings cover 85 percent of the potential customers in the top 100 U.S. markets, according to the carrier. West said that 4G coverage will be introduced in markets where high demand for the faster network is expected, and that rollouts beyond those markets would be demand-driven. This is in contrast to Sprint Nextel’s plans for its CDMA2000 1x EV-DO Revision A upgrade, which West said the carrier will extend over its entire network. Single-mode 4G devices would likely be the first to appear, with dual-mode devices covering both WiMAX and EV-DO Rev. A planned.
Sprint Nextel plans to spend about $1 billion on 4G in 2007 and between $1.5 billion to $2 billion in 2008.
Asked about the business case for 4G while Sprint Nextel has yet to roll out EV-DO Rev. A, West said that a 4G network will allow about four times the throughput of current networks, thereby allowing the carrier to support more customers; that the speed of the new network as well as new customer wireless experiences through consumer electronics will drive new revenue; and that the cost of chipsets is expected to be about one-10th of current costs.
Sprint Nextel announced earlier this week that it was accelerating its deployment of its EV-DO Rev. A coverage. The carrier said that it will start rolling out Rev. A service in the fourth quarter of 2006 and that it plans to cover about 40 million customers by the end of the year. However, Sprint Nextel’s second-quarter customer numbers were disappointing—the operator gained only about 210,000 direct, postpaid customers, although it continues to lead the national carriers on wireless data revenue.
Sprint Nextel shares were down nearly 3 percent in midday trading as Wall Street reacted to the 4G announcement.
