Today, Sprint has announced that it will acquire full ownership of Clearwire in an effort to increase its spectrum holdings and gain full control over the upcoming Clearwire LTE network. With this acquisition Sprint will control more spectrum in the country than any other carrier.
Sprint’s desire to fully own Clearwire is largely a result of the unstable relationship the companies have had over the years. In the beginning, Sprint was merely a competitor that provided similar service through its now-defunct Xohm. The two went on to discuss network/spectrum sharing in order to improve both businesses. Things became more complicated when Sprint merged Xohm with Clearwire in order to offer better WiMAX service (and giving Sprint 50% ownership of the company). Since that event in 2008, Sprint and Clearwire have engaged in a difficult dance of trying to work together while not quite working hand-in-hand. This led to a lot of confusion, and ultimately caused the failure of the nationwide WiMAX deployment.
Fast forward to 2011, when Clearwire announced it would deploy LTE alongside WiMAX in select metropolitan areas (provided that it received funding from its investors first). Now in 2012, SoftBank is in the process of acquiring 70% ownership of Sprint-Nextel Corporation in a $ 20 billion investment. This investment allowed Sprint to finally have the cash to purchase the remaining 49.2% of Clearwire it does not already own for $ 2.2 billion. Additionally, the move will infuse Clearwire with $ 800 million over 10 months to begin the work to deploy LTE-Advanced TDD while it waits for approval to acquire Clearwire. But why go through all the trouble?
It’s the spectrum, stupid
Despite the wireless industry’s ambivalence to Clearwire’s spectrum, there is a lot of potential in it. Clearwire’s 2.5GHz spectrum is uniquely positioned to be used as a global LTE band, provided a certain band configuration is used.
In the past, Clearwire has stated that it wishes to use the 2.5GHz spectrum assets it has for a capacity-based TD-LTE network. To that end, Clearwire’s spectrum was codified in the 3GPP as band class 41, a TDD band that covers the entire frequency range. There is one major problem with this plan: the lack of economic scale. There simply aren’t that many devices that support it at this time.
That could change if Chinese mobile operator China Mobile starts ordering dual-band TD-LTE devices that work for both its band 40 TD-LTE trial network and Clearwire’s future band 41 network. China Mobile’s 600+ million subscriber base makes it a very good target to force the economic potential of the band to rise. Additionally, SoftBank Mobile (the Japanese network operator owned by SoftBank) has a TD-LTE network operating on band 41 in Japan right now.
Next page: What does this mean for the future?