Clearwire Key to Sprint's Future

Embattled wireless carrier Sprint owns 55% of broadband provider Clearwire. Other partners include Comcast, Google, Intel and TimeWarner Cable.

There's been renewed speculation about whether T-Mobile and Sprint will need to combine to confront the larger US carriers AT&T and Verizon. There are a range of potential problems and challenges with the merger idea, but it raises the question of how Sprint will compete going forward. 

The irony right now is that Sprint's network, which is much stronger than its reputation, has excess capacity because the company has been losing roughly a million wireless subscribers a quarter. This stands in contrast to AT&T, which is seeing its network overloaded by iPhone users. 

Recognizing that Clearwire and 4G coverage is critical to the carrier's future, Sprint CEO Dan Hesse said that the company would not relinquish control of the joint venture. According to a report in Reuters:

"I would find it hard for me to imagine a situation where we would let our ownership go below 50 percent," Hesse said in response to a question at a UBS investor conference.

Meanwhile AT&T is considering throttling data usage for wireless customers. According to remarks by AT&T mobility president Ralph de la Vega:

Just 3 percent of smartphone users are consuming 40 percent of the network capacity, de la Vega said, adding that the most high-bandwidth activity is video and audio streaming.

AT&T is considering "educating" users about their data consumption in an effort to get them to do it less. Realistically the only lever the company has to regulate data is pricing. However, market competition will prevent significant price increases. This becomes especially true after the iPhone leaves AT&T exclusivity.

Depending on who gets the iPhone next (T-mobile, Verizon) there could be defections from AT&T. In addition there is pent-up demand (at least in the immediate term) from users who want the iPhone but don't want to contend with switching to AT&T. 

Sprint could turn the tables on its rivals, including Verizon, if it's first out of the gate with 4G wireless coverage and creative billing that gives users access at home and on the go to the faster network. 


Related: Sprint moves Boost head Carter to oversee 4G