News Analysis: Sprint directors are mulling an offer by Deutsche Telekom and T-Mobile USA to invest in the Clearwire network owned by Sprint.
A growing coziness between T-Mobile USA and Sprint Nextel
has been rumored for months. At one point there were rumors that T-Mobile's
parent company, European communications goliath Deutsche Telekom, was preparing
to buy Sprint and make it part of T-Mobile. So far, nothing had come of it-until
The Wall Street Journal reported that Sprint's directors
are considering an offer by T-Mobile to invest in Sprint's Clearwire 4G
service. Sprint currently owns slightly over half of Clearwire, giving it
control of that company. Allowing T-Mobile to invest into Clearwire will give
Sprint the money it needs to complete the built-out of its new 4G network, and
it will give Deutsche Telekom an entr??Â«e into Clear's LTE development effort being
put into place in Arizona.
At first glance, it's a little hard to nail down why
T-Mobile might do this. Sprint is a relatively minor player compared with Deutsche
Telekom, after all. Meanwhile, T-Mobile has been aggressively building out its
HSPA+ 3G network around the United States.
While it's 3G versus Sprint's Clearwire 4G, the fact remains that T-Mobile's
network is about twice as fast as Sprint's.
But in the long run, the future of wireless data is 4G,
and it's a sure bet that Clearwire's 4G speeds will get a lot faster,
especially when LTE becomes part of the mix. While T-Mobile doesn't really need
Sprint's WiMax version of 4G, LTE is another matter. That's where the industry
is heading, and both Sprint and T-Mobile need to be there as quickly as they
can if they are to compete against the LTE network being built by Verizon
Wireless. That network should be in limited commercial operation by the end of
So far, this all kind of makes sense. Sprint needs
investments to help build out 4G. T-Mobile needs a path to 4G quickly. Deutsche
Telekom can afford to invest in anything it wants, including Clearwire 4G, not
only for use in the United States,
but also for its global operations. It's a win-win.
But then there's that elephant in the room. You know, the
one that's about T-Mobile buying Sprint. On one hand, the investment into
Sprint's 4G could be simply that-an investment into technology both companies
need. But it could also be the first move in a bid to own Sprint Nextel one
piece at a time.
Wayne Rash is a Senior Analyst for eWEEK Labs and runs the magazine's Washington Bureau. Prior to joining eWEEK as a Senior Writer on wireless technology, he was a Senior Contributing Editor and previously a Senior Analyst in the InfoWorld Test Center. He was also a reviewer for Federal Computer Week and Information Security Magazine. Previously, he ran the reviews and events departments at CMP's InternetWeek.
He is a retired naval officer, a former principal at American Management Systems and a long-time columnist for Byte Magazine. He is a regular contributor to Plane & Pilot Magazine and The Washington Post.