The past week saw quite a few developments in the telecom
sector. Sprint (
S
) continued to be aggressive with its 4G LTE roll out, announcing
the expansion of its LTE coverage to another 11 cities and
counties in the coming weeks. The third largest U.S. wireless
carrier is also planning to levy an additional $10 per month
surcharge on all iDEN subscribers starting January 1st in a bid to
migrate the remaining iDEN subscribers and accelerate the
network's shutdown. Verizon (
VZ
), meanwhile, started a double-data prepaid promotional offer for
3G that it hopes will help it continue to monetize its 3G network
until most of the postpaid subscribers migrate to 4G and 3G becomes
obsolete.
Sprint's LTE rollout
With the iPhone 5 launched and the holiday season upon us,
Sprint seems to be rolling out LTE at a breakneck speed in
order to catch up with AT&T (
T
) and Verizon as soon as possible. Just two weeks after it
announced the addition of nine additional U.S. markets to its LTE
coverage, the carrier said that it is expanding its high-speed 4G
network to another 11 cities and counties in the coming weeks.
Although late to the LTE race with Verizon and AT&T sporting a
much wider LTE coverage, the third largest wireless carrier plans
to aggressively make up for lost time with its Network Vision
strategy that has already brought LTE to 43 U.S. markets and will
add another 115 cities to its rapidly expanding LTE footprint in
the coming months.
The rapid LTE expansion as well as 3G upgrades is causing Sprint
to increase its capital spending as a means to sustain future data
growth. (see
Sprint Speeds Up 4G LTE Rollout As Dogfight For
Data Revenue Rages
) While Sprint's balance sheet is highly leveraged, its recent
deal with Softbank to sell a majority stake in return for cash
gives it all the ammunition it needs to build out a robust
nation-wide LTE network as well as bolster its spectrum position
through strategic acquisitions such as the
recent US Cellular deal
. It is also shutting down its outdated iDEN network, and plans to
re-purpose the spectrum for LTE.
iDEN shutown nearing
With the deadline for its impending iDEN shutdown
nearing, Sprint is getting aggressive with plans to
migrate the remaining iDEN subscribers off the network as soon as
possible. The third largest wireless carrier in the U.S. has
started notifying its iDEN push-to-talk (PTT) subscribers that,
beginning January 1st, they will incur an additional fee
of $10 for every month that they use the iDEN network before the
eventual shutdown by June 30th next year. As a more than viable
alternative, the carrier is promoting its CDMA Direct Connect PTT
service which offers comparable speeds at similar prices with three
times the coverage. It risks losing many of these subscribers to
rivals such as Verizon and AT&T but the
long-term advantages of shutting down iDEN and using the spectrum
for the high-speed and much more efficient 4G LTE network
should help more than compensate for the near-term market share
loss.
Verizon's 3G plans
With 4G LTE fast becoming the de facto standard for smartphones
and carriers increasingly promoting their high-speed LTE
networks, Verizon seems to be making plans for its soon
to be outdated 3G network. Traditionally a player that has
preferred going after high-value contract customers, the largest
wireless carrier in the U.S. warmed up to prepaid subscribers
over the holidays with a double-data promotional offer. The
promotion, which runs through January 31, has Verizon offering
subscribers 2GB of data instead of the usual 1GB associated
with its $80 unlimited-talk-and-text prepaid plan. The
catch here is that the subscribers will be able to use only 3G for
data and not 4G LTE. By limiting 3G for prepaid data promotions
while also selling 4G smartphones with postpaid plans, Verizon
seems to be planning ahead by looking for ways to fill its 3G
network as 4G migration picks up speed. (see
Verizon Taps Prepaid Market Growth With 3G As
Subscribers Migrate to 4G
)
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