Is Sprint Finally Turning Its Business Around?

"Assuming it can execute on its current plans, the worst is behind it," says Yankee Group analyst Carl Howe.

Sprint is winning back consumers the old-fashioned way: with hard-nosed cost management, good customer service, and simpler and cheaper services, says Howe, despite a tough period since about 2005 when the Nextel deal and then operational issues caused huge customer defections.

Sprint Nextel’s annualized customer churn rate in the first quarter of 2008 was 38.2 percent, one of the highest in the wireless industry, and a disproportionate share of those losses came from the Nextel portion of the customer base.

In the first quarter of 2008, in fact,  Sprint posted a $29.7 billion write-down of the $36 billion it paid for Nextel. It isn't clear what might have happened had Sprint not purchased Nextel, but it seems clear now that it was a mistake.

But Sprint has been clawing its way out of a hole for the past few years. Annual churn is down to about 33 percent, which is higher than Sprint probably wishes it were, but is a vast improvement.

Based on our North America Mobile Carrier Monitor, annualized customer churn at Sprint has fallen to just over 33 percent.

And though some might view the segment as unappetizing, Sprint has focused much of its marketing efforts on prepaid plans, the fastest growing segment of the mobile phone market.

Sprint has improved its customer satisfaction significantly since 2008 as well. Howe says the average satisfaction of Sprint customers is 7.3, just slightly higher than the industry average of 7.2, and higher than AT&T according to the May 2010 American Customer Satisfaction Index.

While not yet profitable again, Sprint has been slowly and steadily improving its financial performance.

And while some might scoff at the model, Sprint also is restructuring its business as wireless providers in some other markets (India and Europe) also have done, focusing on marketing and outsourcing technical elements of the business.

Basically, Sprint is trying to externalize all functions non-core to service differentiation, customer acquisition and retention. It has spun off network operations management, though not ownership, to Ericsson AB.

That agreement moved 6,000 Sprint employees to Ericsson, while reducing Sprint’s operational expense.

Spirnt also is sharing mobile infrastructure. In 2008, Sprint sold off more than 3,000 of its mobile towers to TowerCo and agreed to lease these towers back for its operations. By leasing instead of owning the towers, Sprint was able to free up capital.

The operator also has roaming agreements with Verizon, giving Sprint the flexibility to exchange operational cost for coverage when it doesn’t feel capital expenditures for coverage are warranted.

While Verizon and AT&T are swapping maps and million-dollar advertising budgets fighting to capture postpaid customers, Sprint has no fewer than four brands focusing on prepaid subscribers: Assurance for government-subsidized plans, Common Cents for Walmart shoppers, Boost for voice-focused consumers, and Virgin Mobile for data-oriented young consumers.

With the postpaid wireless market saturated and prepaid plans now accounting for the majority of growth in wireless, Sprint is focused on serving customers that the other carriers aren’t.

Sprint also was first out of the gate with a fourth-generation network, though some might now say it faces a switch of air interface again from WiMAX to Long Term Evolution.

It is not completely clear whether consumers will see WiMAX, Wi-Fi features Sprint is emphasizing and its approach to retail pricing as the differentiators Sprint hopes they will be, but there is no question Sprint is trying.

Any consumer considering a higher-end smartphone purchase these days probably will find Sprint's approach a lot easier to understand, as users now must decide how many voice minutes they want, how many text messages they need, whether they want or need multimedia messaging service, which data plan is best, and so forth. It simply is more complicated to buy a device and service today, than it used to be.
Sprint is trying pretty hard to simplify all of that.

Yankee Group believes that it will rebound this year more strongly than its competitors might think, says Howe.

So Who'll Follow AT&T's Wireless Pricing Model?

Question: Which Internet access providers will follow AT&T and adopt some form of "bucket-based" access pricing? Answer: Everybody, eventually.

To be sure, Sprint says it has no immediate plans to change its "unlimited" pricing. Sprint Nextel currently has no plans to change its mobile data pricing structure in the wake of AT&T Mobility's decision to move to a usage-based model, according to CEO Dan Hesse, at least for its fourth-generation network and voice devices.

Sprint already has a 5-Gbyte monthly cap for users of its 3G data cards and dongles, though the 4G network has an unlimited plan for dongle and data card users.

Clearwire Corp, 55 percent owned by Sprint Nextel Corp, also plans to keep unlimited data plans. But pricing changes are inevitable.

The reason the WiMAX network can offer unlimited data access across the board is because there are so few users on the network at the moment. That will change.

So Who'll Follow AT&T's Wireless Pricing Model? - Comcast: 'gauging customer interest' in unlimited wireless broadband - dslreports.com

Sprint Says HTC Evo Set a Sales Record

Whatever else the HTC Evo might mean for Sprint, it seems already to have accomplished one thing: settting a single-day sales record for Sprint Nextel. On June 4, 2010, the Evo became the device that has sold the most units in a single day, ever, at Sprint Nextel.

Sprint says the total number of HTC EVO 4G devices sold on launch day was three times the number of Samsung Instinct and Palm Pre devices sold over their first three days on the market combined.

In many cases it appears the Evo, which works on both the 3G and 4G networks, was being bought by customers who actually cannot use the 4G network yet, as Clearwire, which is building the 4G network, strains to add markets in Boston, Cincinnati, Cleveland, Denver, Los Angeles, Miami, Minneapolis, New York City, Pittsburgh, Salt Lake City, San Francisco, St. Louis and Washington, D.C.

"HTC EVO 4G has more than lived up to our expectations that it would be one of the most anticipated technology products of the year," said Kevin Packingham, Sprint SVP.

Top-10 U.S. Telecom Sites Suggest

The May 2010 Hitwise report on site traffic has some interesting potential implications for communications service providers.

The top single site was Cricket, a firm historically focused on the wireline replacement market and using value pricing to replicate the unlimited free local calls element of fixed line service.

Verizon has three sites in the top 20, as well as holding spots two and three for traffic.

What is notable is that one of the three Verizon sites is the customer portal, indicating that people are becoming quite comfortable with using the portal for paying bills, asking questions and checking on usage and status information.

AT&T has two sites on the list, and the percentage of traffic for the four leading U.S. mobile carriers mobile sites is in line with their respective market shares.

T-Mobile USA also has two sites in the top 10, one of them its customer service portal, which likewise suggests user comfort with online support, as well as T-Mobile's possible success converting its customers away from paper billing to online-only billing.

Comcast's site in the top-10 also is a customer support portal. Back in the "old" days the top-10 sites were likely to be retail sales and transaction portals. These days, three out of 10 are relatively strictly customer support sites.

Can Clearwire Break Into Top-Five Mobile Ranks?

There being somewhere between 234 million and 238 million mobile customers in the U.S. market, one percent of market share represents about 2.4 million customers.

That means Clearwire now has less than half a percent market share, as it has about a million customers.

WiMAX no longer offering an advantage over Long Term Evolution, despite its headstart in the market for 4G services, one has to wonder whether it is realistic to expect Clearwire to reach the ranks of the top five contenders.

Clearwire is in eighth position at the moment, but with a healthy gap between it and number-seven Leap, which most observers think will become part of another company in the not-too-distant future. MetroPCS is the most-often-mentioned partner.

That would clear the ranks above Clearwire, allowing it to move to spot seven, but with a bigger gap than it now faces for future moves. A merged Leap and MetroPCS would have 12 million to 13 million subscribers.

Clearwire would have to leapfrog US Cellular to take spot number six, assuming US Cellular itself did not wind up as part of one the largest carriers.

One suspects Clearwire's center of gravity will have shifted to wholesale customers, rather than retail, several years into the future, as Sprint and Clearwire's cable customers ramp up sales of 4G services.

Breaking into the  top five retail ranks seems impossibly distant.

WiMAX and HSPA+ Speeds About Equal, in This Test

At least according to this test of the T-Mobile USA network and the Sprint 4G network in Philadelphia, Sprint's WiMAX network and T-Mobile's HSPA+ network delivered roughly similar download speeds, just shy of 3 Mbps on average.

These are real-world, average speeds, not "up to" numbers. By some estimates, 3 Mbps is easily twice as fast as the typical real-world speed with 3G, and faster than many home DSL connections.

4G Networks Tested: WiMAX vs. HSPA : The Numbers (Phone Scoop):

Sprint HTC EVO 4G gets its First Patch

Sometimes you only have to wait a few hours or days before a bug gets fixed. So it is with the Sprint HTC Evo, on sale today for the first time. Early beta users had reported a memory card issue that now is fixed.

The patch can be completed over the air, manually if required, by going to the "settings" and "system updates" menus and then following the directions.

Also, by this point all the initial units have been sold. As of 8:30 am Mountain time 90,000 units had been sold, leading one store manager to warn his staff that all units would be sold within an hour.

Activation computers appeared to be under strain as well.

Sprint HTC EVO 4G gets its first OTA update, fixes microSD issues

Is Clearwire's Future as a Wholesaler?

Clearwire today is partly a retailer of services under its own name, and a major retailer of spectrum services to cable companies and Sprint. But one wonders, given its continuing capital needs, and the existence of at least one major mobile provider that desperately needs new fourth-generation spectrum (T-Mobile USA) whether Clearwire will not ultimately find it is primarily or exclusively a wholesale provider of 4G spectrum.

Comcast, Intel, Time Warner Cable, Google and Bright House Networks are minority investors while Sprint is the majority owner.

A research note from Credit Suisse evaluates the value of mobile satellite spectrum of the sort Harbinger Capital has been touting as the basis for a brand-new U.S. Long Term Evolution network, as being worth something on the order of $0.50 per MHzPOP. That evaluation apparently is derived from prices paid in 2006 for AWS spectrum that mobile providers now are using.

If those prices are sustainable in today's marketplace, then Clearwire might well be sitting on spectrum worth about $20 billion, Business Week has suggested. Some think it might be worth more.

read the Business Week story here

For Clearwire, much is riding on whether its strategy of buying up some 85 percent of the U.S. 2.5-GHz spectrum band will pay off.

The $5 billion Clearwire will pay its license holders for its spectrum over the next three decades is a bargain compared to what its rivals are paying. AT&T and Verizon bought their spectrum that can be used for 4G at government auction in 2008, paying a combined $16 billion, though many would argue those allocations, at much-lower frequencies, have propagation characteristics so much better that the premium is worth paying.

An unfunded business plan also remains an issue. At its current rate of spending, Clearwire will burn through its cash in 2011, according to Steve Clement, an analyst at Pacific Crest Securities. Clearwire may need $3.8 billion more to reach its goal of building a network that covers 270 million people, Clement says.

Clearwire now has about one million subscribers, double what it had in 2009. It added 283,000 net new subscribers in the first quarter, compared with 133,000 new customers in the previous quarter.

But even that rate of growth is unlikely to get Clearwire close to players such as Verizon Wireless, which had 93 million customers or so in the first quarter, out of 286 million total subscribers. Verizon has 31 percent of the market; AT&T has 25 percent; Sprint and T-Mobile USA both have 12 percent of the market.

Even at five million subscribers, Clearwire would still have only about 1.5 percent to two percent of the U.S. market, by the time it reaches that level, in two years, perhaps, assuming the overall market grows over the next two years about as much as it has been this year, and if Clearwire's growth accelerates.

link

Sprint HTC Evo: the Video

Ad for the new Sprint HTC Evo, coming June 4.

HTC Evo Has a Bigger Battery: It Has To

Thanks to its 4.3-inch screen and 4G, Sprint's HTC Evo needs a 23 percent larger battery than the iPhone 3GS just to get similar battery life to the iPhone, a new analysis suggests. The battery is also about 15 percent larger than that of a Droid Incredible and seven percent larger than the pack in a Nexus One.

All that likely is true. It's the price of a larger screen.

HTC Evo 4G torn down, compared to iPhone | Electronista

Sprint Will Hit it Out of the Park with Evo

I think Sprint is going to hit it out of the park with the Sprint Evo.

Consumer Satisfaction With Video, Wireless Up, Sprint Gains Most

Customer satisfaction with cable and satellite TV rises to its highest level in 10 years, up five percent, with nearly all companies registering improvements, according to the American Customer Satisfaction Index.

Sprint Nextel seems to have made the largest gains over the last two years, jumping by double digits for each of the past two years. That's important as Sprint Nextel's customer service was widely seen as the cause of its high churn over the past several years. The improvement in customer satisfaction is mirrored by steadily better churn performance over the last couple of years.

Both Verizon’s FiOS and AT&T’s U-verse lead the way with scores of 73 and 72, respectively. Satellite TV still leads over traditional cable, with Dish Network soaring 11 percent to 71 to overtake rival DirecTV for the first time since 2005.

DirecTV fell four percent to 68 as aggressive pricing promotions by DISH, coupled with a price increase by DirecTV, has the two satellite TV providers moving in opposite directions.

All four of the largest cable providers show some improvement. Charter Communications makes the biggest leap, gaining 18 percent to 60. The company is now statistically tied with Comcast and Time Warner Cable, both up three percent to 61.  Cox Communications gained two percent to 67 to lead all traditional cable companies for a seventh straight year.

“Having enjoyed near-monopoly status in most areas for many years, cable companies had little incentive to provide quality services at a good price,” says Claes Fornell, founder of the ACSI.  “Now that satellite and fiber-optic TV providers have created a competitive challenge to cable, the cable companies have started to step up customer service and realize some gains in customer satisfaction, but they still remain far behind both satellite and fiber-optics.”  

Traditional local and long distance service improved four percent to 75, the highest level in more than a decade.  AT&T is on top after a six-percent surge to 75, followed closely by Cox Communications, unchanged at 74, and Verizon, up three percent to 73. CenturyLink and Comcast round out the bottom of the industry, with CenturyLink gaining three percent to 70 and Comcast rising two percent to 68.

Customer satisfaction with wireless telephone service set a new all-time high for the second consecutive year, rising four percent to 72.  T-Mobile gained three percent to 73, tying for the lead with Verizon Wireless, which declined one percent.

AT&T Mobility improved three percent to 69. Two years after the iPhone was introduced as an exclusive product, AT&T seems to have made strides to relieve some of the strains on its network caused by the rapid influx of iPhone customers.

Sprint Nextel had the largest improvement, gaining 11 percent to 70 a year after a similarly large 13 percent jump, pushing the wireless carrier from well below to very close to the industry average.

Perhaps the most-intriguing bit of commentary provided by ACSI was the brief note that "with wireless looking to be the future of telephone service, providers are ramping up efforts to provide new services, simplified usage plans, and better pricing." Note the language: "wrieless looking to be the future of telephone service."

Google Android Strategy is Working, Despite Nexus One

Google's strategy of seeding the market for its Android operating system, unlike its experiment with device retailing (NexusOne) seems to be succeeding.

The Android operating system "continued to shake up the U.S. mobile phone market in the first quarter of 2010," moving past Apple to take the number-two position among smartphone operating systems, according to The NPD Group.

Based on unit sales to consumers last quarter, the Android operating system moved into second position at 28 percent behind RIM’s operating system (36 percent) and ahead of Apple’s OS (21 percent).

Google's effort to retail unlocked, full-price handsets using a Web-site-only approach does not seem to be working out so well, as one might have predicted. Both Sprint and Verizon Wireless have declined to sell the Nexus One, though the logical explanation is that the HTC "Evo" at Sprint and "Incredible" at Verizon Wireless are functional equivalents, at the very least.

And it might just be the case that the battle between AT&T and Verizon Wireless accounts for the change, as iPhone sales in the United States are exclusive to AT&T, essentially limiting sales, while Android devices are pushed both by Verizon, T-Mobile USA and Sprint.

Verizon also has been aggressive about offering "two for the price of one" sales of Android devices.

Smartphone sales at AT&T comprised nearly a third of the entire smartphone market (32 percent), followed by Verizon Wireless (30 percent), T-Mobile (17 percent) and Sprint (15 percent).

Exclusivity on AT&T’s network obviously limits the potential sales for Apple to some extent. Verizon has more than 92.8 million subscribers, none of which can buy an iPhone for use on the network.

It isn't so clear whether the range of Android models or prices are a meaningful contributor to Android sales volume, but one has to think so.

The NPD Group cites an average smartphone price of $151 in the first quarter of 2010, roughly half of the $299 price tag for a top-shelf iPhone. Apple offers subsidized models at $99 and $199, but most subsidized Android phone prices top out at $199 and go down from there.

The Samsung Behold 2 running Android is currently free with a service plan at T-Mobile, for example. With so many choices, consumers can find Android units for well under $99 these days and can shop around in a greater range of price points.

link

Sprint HTC Evo on June 6?

The latest rumor about availability of the Sprint HTC Evo is "around June 6, 2010." Reportedly the device will reail for about $200 on a two-year contract, and as much as $600 if you want to buy it without a contract.

Some policy advocates think such contracts impair consumer welfare because they make it hard for consumers to switch whenever they feel like it. One simply should note that any consumer can buy a device at full retail price if that is what they prefer.

Most consumers keep demonstrating, though, that they prefer $200 devices and contracts, compared to $600 devices without contracts. If you don't want a contract, don't buy one. Most consumers can figure out that a $200 subsidized phone provides real value.

link

Clearwire Emerging as a Wholesaler

Perhaps Clearwire did not initially think its business model would be anchored by wholesale wireless, but that seems to be shaping up as key to its future. Of the 283,000 net new subscribers added in the first quarter of 2010, 111,000 of them, or 39 percent, were gained by wholesale partners.

Most of the other major national wireless providers also have some wholesale operations, but none likely approach Clearwire's percentage. Clearwire’s network is behind Sprint’s 4G services as well as Comcast and Time Warner Cable wireless services. Then there is T-Mobile USA, which seems to need wholesale 4G capacity as well.

It might not be unreasonable to speculate that one reason Clearwire is preparing for a transition to Long Term Evolution, instead of sticking with its WiMAX air interface, is that T-Mobile USA might well require LTE capability in order to sign up.

"There was an agreement before that was really a commercial deal between Intel and Clearwire that would restrict us from using anything other than WiMAX up to, I think it’s February of 2012," said Bill Morrow, Clearwire CEO. "That deal is no longer in effect."

Now, either Intel or Clearwire can give 30 days notice and the deal is over. "So it does give us the flexibility that if we wanted to do a commercial launch of LTE or some other technology, that Intel would not be holding us back," said Morrow.

With less than a million total subscribers, it is too early to say how the retail versus wholesale customer mix holds up over time. Should Clearwire pick up T-Mobile USA as a wholesale partner, and as Comcast and Time Warner Cable gear up their wireless operations, it is not hard to envision wholesale growing to be a majority of customers.

"Soaring Profits" for Broadband Access Providers?

The Phoenix Center says claims by proponents of increased Internet regulation are quite wrong in claiming that firms such as AT&T, Verizon, Sprint-Nextel, Qwest, Comcast, and Time Warner Cable are making "record profits," "substantial profits" or  "soaring profits" that justify further regulation.

Quite to the contrary, those firms are earning at lower rates than the average Standard & Poors 500 firms does, and have done so for the last five years.

The Phoenix Center found that the profitability of the larger broadband access service providers is generally equal to, or below average, for firms in the S&P 500. It would be more accurate to say that profits are "'typical," not "soaring or 'substantial.'

Conversely, content firms like Google and EBay are substantially more profitable than the access providers are,  implying that access providers are not benefiting as much as others in the Internet ecosystem from the surge in broadband adoption and use.

Across all measures of profitability, Google and Ebay are two-to-four times more profitable than the better performing broadband providers.

In fact, the Phoenix Center found that both Wal-Mart and Colgate-Palmolive have much higher profits than the large access providers.

FCC Chairman Julius Genachowski has issued a challenge to the industry for data-driven analysis," according to study co-author and Phoenix Center President Lawrence J. Spiwak. "Accordingly, parties calling for regulation need to present more than just hyperbole about 'soaring' profits -- they need to present facts."

"The evidence shows that BSP profitability is fairly typical of American industry, if not a little low" said study co-author and Phoenix Center Chief Economist George S. Ford, PhD. "Based on available evidence, regulatory intervention based on substantial profitability by large BSPs has no basis in fact."

The Very Best Android Phones For Each Carrier

As it turns out, some think the "very best" Android devices available on any U.S. mobile carrier are made by just one company: HTC. The firm seems to be betting its future on Android, and from the looks of things, is doing a heck of a job rolling out top of the line Android devices for every leading U.S. carrier.

The Very Best Android Phones For Each Carrier

For T-Mobile customers the most future-proof choice is a Nexus One. For Sprint 4G customers, it is the HTC Evo. At AT&T the top device is the Nexus One. Verizon customers should get the HTC "Incredible," at least when it goes on sale on April 29, 2010.

Operator App Stores Get More Traction Than You Might Think

Though many observers, including many service provider executives, might be skeptical about the long-term viability of operator-sponsored mobile application stores, a new study by Nielsen suggests consumers are favorably impressed with operator app stores, as compared to handset stores such as the Apple App Store.

(click image for larger view)

Many observers believe device app stores will ultimately gain favor, but a new Nielsen survey finds ongoing loyalty to carrier stores.  As of the end of 2009, half of all applications users were accessing carrier app stores according to Nielsen’s new App Playbook service.

That is not to say the Apple App Store has lost any luster in the United States. The relatively new BlackBerry App World Store also was the second most popular app store, in part because of BlackBerry’s industry-leading installed base.

But carrier application stores were not as far behind as some might think. About 84 percent of respondents said they were satisfied with the Apple App Store, while 81 percent said they were happy with the Android Market.

Some 59 percent of respondents said they were satisfied with the BlackBerry App World. About 56 percent reported satisfaction with the Windows Marketplace.

Most mobile carrier stores compare favorably with BlackBerry. About 64 percent of respondents were satisified witht he AT&T Application Store, while 65 percent said they were satisfied with the Sprint Application Store.

Some 66 percent said they were happy with the T-Mobile Application Store and 62 percent reported they were satisfied with the Verizon Application Store.

Nielsen’s App Playbook  surveys more than 4,000 application downloaders in the United States every six months about their mobile application usage.

more detail

Is Another National LTE Network Needed?

Do businesses and consumers in the United States need one more fourth-generation nationwide wireless network, aside from the existing Clearwire, soon-to-be-built Verizon and AT&T networks, as well as regional networks being created by regional mobile providers and cable companies, not to mention high-speed 3G networks running at top speeds of 22 Mbps?

Though no firm answer can be given to that question, we might find out relatively soon whether investors think there is a need for another facilities-based 4G network of national coverage.

Harbinger Capital, which recently merged with SkyTerra, proposes to build a fully integrated satellite-terrestrial network to serve North American mobile users, with a national 4G terrestrial network covering 260 million people by the end of 2013.

The planned network would launch before the third quarter of 2011 and cover nine million people, with trials set initially for Denver and Phoenix. The next milestone is that 100 million people have to be covered by the end of 2012, 145 million by the end of 2013 and at least 260 million people in the United States by the end of 2015. Harbinger told the FCC that all major markets will be installed by the end of the second quarter of 2013.

The original thinking has been that wireless services within a number of vertical markets that are highly dependent upon the ubiquitous coverage and redundancy to be provided by its satellite network would be the core of the business strategy. But Harbinger might think there is a market broader than that as well.

Harbinger actually is required by the Federal Communications Commission to provide wholesale access to third parties, and also to restrict total Verizon Wireless and AT&T traffic to no more than 25 percent of total, to provide more competition in the market.

The big issue is whether there is substantial need for additional spectrum at this point. One might argue that industry requests, as well as FCC proposals, for allocation of an additional 500 megaHertz of spectrum for mobile broadband are clear evidence of need.

But there are other issues of market structure and competition. Assuming hundreds of new megaHertz of spectrum can eventually be relocated, most observers think the buyers of such spectrum would be the largest mobile providers such as AT&T and Verizon.

The Harbinger network, by definition, would largely be a platform for other providers, as it would operate as a wholesale provider.

The key business issue is whether there actually is sufficient business demand for another national 4G terrestrial network, though. Sprint and Clearwire both have relatively lavish amounts of spectrum already, and both have shown a willingness to sell wholesale capacity.

One might argue the key differentiator would be the satellite roaming features that would be available on handsets that normally default to the terrestrial network. But the bigger test will be of investor sentiment, as Harbinger will have to raise billions to build the new terrestrial network.

The 36,000 base stations that Harbinger plans to use, along with the tower sites, backhaul and other gear associated with a terrestrial network will require billions of dollars worth of investment.

Analyst Chris King at Stifel Nicolaus estimates that Verizon’s LTE network will cost about $5 billion to deploy. Clearwire has also spent billions on its network, with analyst estimates ranging from $3 billion to about $6 billion. There is no particular reason to think the ubiquitous terrestrial network Harbinger expects to build would cost less.

Investors will have to be found first, before there is a chance to test the thesis that another facilities-based 4G network is needed.

Sprint and Clearwire Might Go LTE for 4G

Sprint Nextel and Clearwire executives have said for some time that WiMAX and Long Term Evolution are similar enough that Clearwire could switch to LTE at some point. But that is more likely to happen when another technology migration to "fifth-generation" technology happens, not in the fourth generation.

In one respect, battles over air interface are simply part of the mobility business. Just as AT&T and T-Mobile opted for the GSM air interface while Sprint and Verizon opted for the rival CDMA air interface, and similar battles were fought over 2G standards, carriers will have to migrate their platforms over time, just as they always have.

The evolution from GSM (3G) to LTE (4G) will still require a new network, with a new air interface, operating on discrete spectrum and requiring new handsets and software. For that reason, each technology generation requires a fork lift upgrade and a refresh of consumer terminals as well. That's just part of the business.

So though Clearwire and Sprint chose WiMAX for 4G, their options for 5G remain open, and both Dan Hesse, Sprint CEO, and Bill Morrow, Clearwire CEO, say they could opt for an LTE derivative for 5G.

Hesse says the choice of WiMAX was based on the fact that Sprint could not wait for LTE standards to jell. It had a business need to move, so it did. "WiMax was tried-and-true tested technology at the time we made the choice," he says. "We couldn't wait."

related article