Leap Wireless ponders Sprint LTE tie-up; Sprint halts LightSquared investment

10 Jan 2012

San Diego-based mobile operator Leap Wireless International says it is considering expanding its current 3G wholesale deal with Sprint Nextel in order to include Long Term Evolution (LTE). Fierce Wireless quotes CEO Doug Hutcheson as saying: ‘When we make a decision on whether we invest or do a wholesale agreement we go all the way down the P&L (profit and loss) and look at the [return on investment]. And so, to the degree that we can see attractive pricing on a wholesale basis – whether that is roaming or data – that is something that the business has been open to traditionally, and would be open to in the future’. Hutcheson made the comments at the CitiGroup Entertainment, Media and Telecommunications Conference in San Francisco, in response to questions concerning Leap’s future 4G plans. The cellco currently resells Sprint’s 3G service under its ‘Cricket’ pre-paid brand in areas outside of its own network footprint. Although Leap launched operations in Tucson, Arizona – its first LTE market – last month, and aims to cover 25 million people by the end of 2012, it does not currently have plans to construct a nationwide 4G network. For its part, Sprint has yet to rule out new spectrum hosting deals. Communications, Engineering & Design magazine quotes CEO Dan Hesse as commenting: ‘It’s more economical for anybody … to work in a network-hosting environment versus Greenfield. We clearly have a unique ability to host other spectrum’.

Hesse’s admission coincides with Sprint’s confirmation that it has halted all investment in its partnership with open access LTE start-up LightSquared, whilst the company seeks regulatory approval from the Federal Communications Commission (FCC). Before work can proceed on the network, LightSquared has to satisfactorily prove to the watchdog that it can eliminate interference problems with GPS satellite navigation devices and aircraft flight safety equipment. Sprint spokesman Scott Sloat told Bloomberg: ‘The companies have agreed to realign our deployment timeline to coincide with potential FCC actions. [Until approval is received] both companies believe it is prudent to pull back on expenses’. Last week Sprint granted LightSquared a one-month extension, until 31 January, to obtain the green light from the FCC. Under the terms of a July 2011 agreement, Sprint will build and operate LightSquared’s LTE network over an eleven-year period, in exchange for USD9 billion in cash and an additional USD4.5 billion in service credits. LightSquared plans to have over 40 million connected consumer terrestrial devices (on a wholesale basis) by 2015, equating to 92% population coverage by that date.