Jun 20th, 2011

Can’t say we didn’t see it coming, folks. Bloomberg is reporting that Sprint and Lightsquared have reached an agreement to deploy 4G LTE on the now network over the next 15 years. The deal is said to be valued over $20 billion and will give Sprint a better shot at keeping up with competing networks in the long stretch.

Sprint originally went with Clearwire for their 4G needs, but that venture quickly went sour as Clearwire found themselves in depth and unable to fulfill their obligations. Sprint’s WiMax network deployed in 2008, but has since only managed to get 77 cities coverage with a majority of their network still in the dark.

In contrast, Verizon has been out rolling 4G LTE out since late 2010 an has already come close to surpassing Sprint with 74 new markets getting coverage. They were on track to surpass Sprint by Q3 2011, and on track to cover their entire coverage area with 4G speeds by the end of 2013. T-Mobile and AT&T also made considerable progress with their 4G networks, though before specifications changed, it was more accurate to describe their 4G as “enhanced 3G”.

Still, everyone’s future was looking bright in the race for mobile broadband and it looked like Sprint would be left in the dust. The fact that AT&T and T-Mobile are lobbying to get approved for a merger doesn’t help Sprint which would put them even further out of reach of leapfrogging one of the top two carriers for second place. (Verizon may have less subscribers than AT&T when all is said and done.)

Without a considerable 4G network to speak of, Sprint could eventually see themselves desperate for the group of subscribers who care more about speeds and a good network than they do about value. That crowd already dominates Verizon and AT&T’s airwaves so growth outlook would be modest, if not stagnant (or worse), if they are unable to keep up.

On the consumer end in the near-term, it remains to be seen what will happen with their current WiMax network. Sprint currently has four phones with WiMax radios on the market, with two more headed our way tomorrow – the HTC EVO 3D – and sometime this summer – the Motorola Photon 4G. They are also rumored to have at least two more coming sometime in the third quarter.

Sprint would make many customers unhappy if the shift from WiMax to LTE isn’t graceful. While we don’t believe they’ll shut that network down anytime soon, anything is a possibility. And with consumers who bought 4G phones and were promised to get compatible service in the near future, they’ll have to have a good strategy for a transition going forward. This won’t be an overnight transition, of course. In fact, it may be another year or two before we see anything substantial from this Lightsquared deal.

As for Lightsquared, they still have a couple of problems of their own, being burdened with the responsibility of making sure their LTE network doesn’t interfere with global satellites. Until they get this situated and prove to the FCC and other governing bodies that their network is harmless, they won’t be deploying much of anything. The first investigation’s results are due July 1st. [Bloomberg]