Having stepped back a bit from the daily-news department it’s always fun to watch what happens when some real news drops on the wireless scene, like today’s earnings announcement from Sprint. The money line from today was Sprint CEO Dan Hesse in the conference-call Q&A telling an analyst that Sprint had signed up 1.7 million 4G customers during the quarter (a number that Sprint had never broken out before). And in Hesse style you had to like the way he said it, on the end of a longer answer about the relationship between Sprint and Clearwire, which supplies Sprint with its 4G network:
And this quarter we gave Clearwire 1.7 million new reasons to be pleased with the relationship with Sprint.
You’d never know it from reading most of the stories about the news (especially the one from CNN, which declared that Verizon had somehow “overtaken” Sprint in the 4G race) but Sprint’s announcement of 1.7 million 4G device subscriber adds during Q2 was pretty amazing, especially when you compare it to Verizon’s 1.2 million 4G LTE subscriber adds during the same time period.
That’s right: A network running WiMAX, the technology everyone already says is dead, whacked Verizon’s new “Rule the Air” 4G LTE campaign by a half-million new adds. Given that Verizon is roughly twice the size of Sprint in terms of overall wireless subscribers and probably even greater than that in terms of cash flow and marketing spend, it’s a victory along the lines of Japan’s recent defeat of the U.S. at the women’s soccer World Cup. It’s a huge upset. It may be an anomaly. But if it keeps up it may be a sign that the U.S. market knows a good deal when it sees one, and that Sprint’s true unlimited data plans for 4G are beating the pants off Verizon’s tiered data cap plans.
According to the unofficial Sidecut math, Sprint now has approximately 6.5 million customers using 4G devices, which includes smartphones like the HTC EVO line and the Samsung Epic, as well as portable hotspots like the Sprint Overdrive. Verizon, now eight months into its 4G marketing, has 1.7 million LTE device subscribers, including smartphones and its own portable hotspots and USB modems. Discounting T-Mobile and AT&T’s so-called “4G” offerings for now — get back to us when you can guarantee a base performance rate, T and T-Mob — here is how we see the 4G market race shaking out in the U.S. so far.
1) Sprint is the clear choice for power users. The bleeding edge of the user base does not have to be told how much a gigabyte is, or how much data they are using. They know they are heavy users and for years they paid through the nose for the privilege. Now with Clearwire and Sprint they can still get a true unlimited plan — and they are likely pushing the envelope on it every day. A year ago Clearwire told us that the average user on their network was gobbling up 7 GB a month — we haven’t seen any recent stats but it’s a good guess that number is higher now. (We asked Verizon for a similar stat and got back a response along the lines of “we aren’t telling you how much data our users use.”)
Though Sprint doesn’t have the iPhone for power users that’s not a problem since for them the key is the ability to access huge amounts of data while mobile. The apps and device doesn’t matter as much, though the HTC EVO devices and the Samsung Epic are more than good enough to satisfy. If you don’t think more people are moving to Sprint because of its unlimited plans then take Motorola as an example: After sitting out the first round of WiMAX smartphone deliveries, Moto is now back in with both feet, announcing a phone and a tablet for Sprint’s so-called dying network. What do they know that the masses of media who are calling WiMAX dead don’t? That WiMAX might sell a few million more phones over the next two years while LTE suppliers work out the kinks? Which brings us to point no. 2:
2) The LTE devices and networks aren’t quite ready for prime time yet. This is a guess rather than any reasoned analysis since Verizon’s network hasn’t really been live for long enough yet to fully assess what’s going on. Yes, we have heard stories about screaming performance from some isolated Verizon LTE customers. That’s cool and it shows promise. But the stumbling, bumbling introduction/retraction/delay of the Moto 4G LTE phone and the 4G capability for the Xoom tablet (now apparently delayed until September, well outside the “90-day window” promised back in February) is a clear sign that the LTE cake needs some more time in the oven. And don’t take our word for it — just scroll through the user reviews of say the HTC Thunderbolt on the Verizon pages and see how many times you read things like “battery drain constant reboot issues” and so on. Yes there’s a lot going on with these phones but — Apple would never let anything like this out the door.
More tomorrow or over the weekend about Clearwire, Sprint and Sprint’s new “deal” with LightSquared, and why we think it may never come to pass — but why that won’t bother Sprint’s 4G plans either way. Stay tuned. And don’t believe everything else you read.