Verizon Doubles Down on 4G LTE Data: Strong Network or Weak Sales?

November 7, 2011

With news leaking out today about Verizon Wireless’s apparent decision to double the amount of downloadable data it allows customers on its 4G LTE network, the question of why is one of two choices: Either Verizon’s confident that its network is strong, or it’s panicking a bit because of slow 4G sales.

The answer? Your guess is as good as mine, and we’ll bet Verizon ain’t telling, one way or the other. Our best analysis is that Verizon’s initial high prices for phones and data plans kept a lot of customers from switching to LTE, pushing them instead to the cooler iPhone even though it was on the slower 3G network. So it’s time to juice the 4G marketing effort, and allowing more data is a cheap way to do so.

Last quarter Verizon sold 2 million iPhones and only 1.4 million 4G devices, with only half of those being phones. With so few users on its new LTE network Verizon can afford to give “double down” deals for a quarter or so to juice its 4G sales effort, which still trails Sprint and has even fallen farther behind Sprint each of the last two quarters in head-to-head 4G sales numbers. Let’s see if the double-data deals change that score.

The good news is, for potential new smartphone customers the somewhat stingy Verizon data plans just got twice as interesting. According to the VZBuzz blog that means an $80 monthly plan now gives you 20 GB instead of 10 GB, all the better to watch video on the NFL Mobile app. Verizon’s also giving the premium NFL Mobile app free to new 4G LTE customers so if you want to be a data hog, now is the time to pig out on Verizon’s new plans.

Sprint to Shed WiMAX, Build its Own LTE Network for 4G

October 7, 2011

Is this the beginning of the end for WiMAX provider Clearwire? Things certainly got dimmer for the nascent national broadband provider Friday when Sprint revealed its new Network Vision strategy that in part calls for Sprint to switch from using Clearwire’s WiMAX to power its 4G network to a Long Term Evolution (LTE) network that Sprint will build itself, scheduled to launch sometime next year.

Though Sprint said it will continue to support current WiMAX devices running on Clearwire’s network through the end of 2012, the decision to move completely to LTE and to basically abandon Clearwire — a company that Sprint owns 54 percent of — left many observers scratching their heads Friday. The most curious part of the move to many was Sprint’s apparent willingness to walk away from the huge spectrum position controlled by Clearwire in favor of repurposing several smaller chunks of cellular spectrum the company now uses for older technologies, like 2G and 3G cellular and the old Nextel iDEN network.

The move to LTE is a complete about-face from last fall, when Sprint CEO Dan Hesse famously said “Our 4G strategy is WiMAX, full stop” in an effort to quell rumors about a potential move to LTE. Now it’s WiMAX that is at a full stop at Sprint, which is apparently ready to completely write off its substantial investment in Clearwire, a relationship once full of promise.

Though Sprint gave a detailed explanation and presentation about how owning its own LTE network would produce a better future, a question-and-answer period with analysts at the company’s event in New York Friday turned a bit ugly at the end, with one questioner testily asking how it made sense for Sprint to spend multiple billions building a new network instead of spending less to upgrade the Clearwire network, which it basically owned. Sprint CEO Hesse did little to provide any clarity on Clearwire’s future, pointedly refusing to comment on whether or not Sprint would provide any additional funding to Clearwire beyond its current agreement to pay for 4G services.

If the multiple questions during the event about Sprint’s decision to basically jettison Clearwire are any indication, it will be a topic the company will need to spend additional time answering in the weeks and months ahead. Sprint’s fellow shareholders in Clearwire are also probably not too happy about the announcement, which on Friday morning sent Clearwire’s stock tumbling 29 percent, down 59 cents to $1.46 per share by 12:30 Eastern time.

UPDATE: Clearwire has issued an official company statement in response to Sprint’s announcement, which follows below:

“As the largest wholesaler of 4G capacity, with unmatched spectrum, Clearwire is uniquely positioned to offer capacity to Sprint, and other carriers, particularly in urban areas where demand is high and their 4G spectrum will be inadequate. Sprint remains dependent on Clearwire for 4G and nothing about today’s announcement changes that. Even with their re-allocation of existing spectrum, it’s obvious that their spectrum resources are insufficient to meet the long term demands of mobile data, but this is not unique to Sprint. Data capacity will clearly stress the capabilities of the low capacity 4G deployments of other carriers due to their spectrum constraints.

“We are also working globally with other members of the Global TDD-LTE Initiative (GTI), including China Mobile, to develop a low-cost, highly scalable device ecosystem that will work across various LTE networks and frequencies. As demand for mobile data increases, Clearwire remains the only viable 4G wholesaler with an operating 4G network, substantial spectrum resources, and a global technology road map to serve this growing market.”

UPDATE 2: Reuters has a good financial-markets recap of the news, spelling out the drop in stock price for both Clearwire and Sprint and identifying our “angry analyst.”

A WiMAX iPhone? Be Still My Beating Heart!

October 3, 2011

UPDATE, Oct. 4: The Rumors Were Wrong, no WiMAX iPhone. Just something called the iPhone 4S, which you can now also buy from Sprint. My heart is beating again.

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