Clearwire losing money, but switching to LTE

Sprint Dan Hesse — Image used with permission by copyright holder

Clearwire, the company that provides Sprint’s wireless network, has been hurting. The company just posted a $168.7 million dollar loss in the second quarter, which is just a bit worse than last year’s $125.9 million loss in the same period. To be fair, revenue more than doubled year-over-year, and Clearwire has been spending a ton of money expanding its network. But it begs the question: With LightSquared now offering its own 4G network to Sprint, who does Sprint go with?

For Clearwire, losing Sprint, their biggest customer, would very likely be a mortal blow. To try to stave off the possibility, Clearwire has started to roll out LTE technology in its network in addition to its previous 4G tech called WiMax. LTE has been the choice of Verizon and AT&T. Compared to WiMax, LTE will offer Clearwire cost savings. However, it comes at the expense of slowing down the expansion of its network, especially as Clearwire will initially be adding LTE-advanced service, which the company says will reach download speeds of up to 120Mbps, to densely-populated areas where it already has a network presence. While its standard for network to initially to reach as many users in as little area as possible, Sprint has to be concerned with being able to compete with other carriers that have larger 4G networks.

So what does it mean for Sprint users? First, the company is looking at options to acquire LTE technology, which is theoretically faster than what WiMax is capable of. The question is where it will come from. Both Clearwire and LightSquared’s LTE networks are simply proposed at the moment, contingent on finding more funding to build them. LightSquared seems to have the advantage on the funding front, but there are concerns that its section of the wireless spectrum to be used for LTE may interfere with GPS, which will at the very least require a fair bit of testing. The good news for Sprint customers is that the company has the option to buy network capability from either company, if not both. The only problem is, no one knows how long it will be until the networks are ready, if at all.

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