SoftBank’s investment in Sprint is a good start, but regaining control of Clearwire is likely to be the game changer for the US market, according to Principle Analyst, AnalysysMason Chris Nicoll.
In a recent article Nicoll discussed the impact of Japanese telecommunications investment firm and operator SoftBank’s $20.1 billion investment in Sprint. He said, while the promised $8 billion in cash will aid with the rapid completion of the Network Vision network and the deployment of LTE service, it will not be enough to move Sprint out of its third place position.
“An infusion of capital will not guarantee Sprint’s success,” Nicoll wrote. “[Sprint] is a competitive number three, but it must complete its Network Vision consolidation project to address the spectrum refarming and technology issues of pulling its iDen, CDMA and the Clearwire WiMAX networks together and it needs to accelerate its LTE deployment.”
In addition to competing with the “Big Two,” Sprint faces renewed pressure from T-Mobile USA, which, along with the $3 billion received from AT&T from the failed merger, has received spectrum in a swap with Verizon Wireless and looks to close a merger soon with MetroPCS. “While it is easy for SoftBank/Sprint to set its sights on market leadership, losing track of T-Mobile is not advised,” Nicoll wrote.
Even with the proliferation of LTE technology, there is still a dearth of high-speed networks. According to AnalysysMason tests, U.S. LTE networks are reaching maximum speeds of 50 Mbps, but are more commonly operating at 8 Mbps to 16 Mbps. Filling that need may be the key to success for Sprint, Nicoll noted.
If Sprint took control of Clearwire it could distinguish itself from the carrier field as the only true 100 Mbps operator, according to Nicoll, using Clearwire’s 2.5 GHz spectrum, TD-LTE technology and SoftBank’s network expertise.
“SoftBank will need to take another big step to change the dynamics of the U.S. 4G market in its favour,” Nicoll wrote. “We suggest that Clearwire’s spectrum could provide the key that could really unlock growth opportunities for SoftBank in the United States.”
The increased speed will help Sprint compete in the market, where it is three years behind Verizon Wireless in deploying LTE. In total, the carrier needs to add 40 million subscribers, Nicoll wrote.