Sprint Nextel Corp.’s decision to deploy mobile WiMAX technology for its next-generation network answers one set of questions, but begs another.
For a couple of years now, Sprint Nextel has touted that it is not a telecom company, but a multimedia carrier. I believe it. But is Sprint Nextel’s ultimate strategy to become a wholesale carrier that sells its services to others? A number of trends point in that direction.
Sprint Corp. was the first carrier to really embrace the MVNO business. Indeed, it owns half of Virgin Mobile USA L.L.C. And while CDMA competitor Verizon Wireless didn’t add any indirect customers in the second quarter, Sprint Nextel’s customer gains have largely been from its indirect channels, including its MVNO partners.
Further, since Sprint Nextel isn’t hamstrung by a wireline telecom parent, it has been easy for the carrier to partner with cable TV providers to try to package a bundle of wireless and wireline voice, Internet and TV offerings. Sprint Nextel also holds a 5-percent stake in the cable partnership bidding in the advanced wireless services auction.
And finally, some analysts say Sprint Nextel’s announcement to deploy WiMAX technology could be enticing to satellite TV providers that need interactive broadband access into the home.
Sprint Nextel seems intent on being the company that provides the wireless asset in the content bundle.
Sprint Nextel’s partnerships outside of wireless could give the carrier the muscle to continue to compete against Cingular Wireless L.L.C. and Verizon Wireless-both of which have been executing their strategies almost flawlessly.
But partnerships, whether with MVNOs or companies that provide different pieces of the bundle, have some inherent risks. Is Sprint Nextel spreading itself too thin with too many partners? The cable JV, to which the carrier has committed $100 million, is only mutually exclusive for three years. Can Sprint Nextel woo satellite providers and at the same time keep competing cable TV operators satisfied?
Also, does Sprint Nextel have the necessary resources to successfully deploy its CDMA2000 1x EV-DO Revision A enhancements and concurrently turn around and pull off a WiMAX network deployment? No one has deployed either of these technologies on a large scale yet so there are bound to be problems along the way.
And finally, as much as partnerships seem to make sense financially and otherwise, in the end, each player wants to own the customer. And owning the customer is quite different from sharing the customer.
