The past week saw quite a few developments in the telecom sector. Sprint (NYSE: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 (NYSE: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 (NYSE: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 It is also shutting down its outdated iDEN network, and plans to re-purpose the spectrum for LTE.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)