Sprint Teams With Rural Carriers to Push Back Against AT&T, Verizon

Sprint is offering rural carrier groups access to LTE equipment and devices—a move that gives more Americans 4G access and Sprint needed scale.

Sprint has developed a program with the Competitive Carriers Association (CCA) and NetAmerica Alliance to accelerate the deployment and use of 4G LTE technology across rural America.

Sprint plans to offer its new partners' members low-cost access to the equipment needed to build out LTE networks, as well as low-cost access to smartphones and tablets able to take advantage of the technology.

The CCA includes more than 100 small carriers, while the NetAmerica Alliance is a "democratic, peer-to-peer union" of communication service providers (CSPs) dedicated to serving rural America.

"We would like to assist you. If you need CAPEX, LTE equipment, we would strongly support you, financially and systematically," Sprint Chairman Masayoshi Son said March 27, during a keynote address at the CCA Global Expo 2014.

"We will offer you the technology, with the spectrum, to offer … 10 to 20 times the average speed of wired or wireless technology," Son continued.

"On top of that, we would offer you the handsets and tablets that will accommodate your spectrum bands. … With the LTE network and LTE devices, we would have a full complementary partnership with you."

Starting in January 2015, Sprint plans to offer 4G LTE devices with a chipset that enables them to roam on the lower 700MHz spectrum—the spectrum primarily used by CCA and NetAmerica Alliance members.

Son, who is often described in the media as a "Japanese billionaire," concluded his speech with some details about his personal history. He was born in a small, rural village to a poor family of Korean origin, which made him deeply an outsider in Japanese culture.

"Any kids born rich or poor should have equal opportunities," said Son. "Even if you were not born in metropolitan areas … all of our kids, all of us, should have equal opportunity for the future. Equal dreams for the future. So I would say, let's fight back. Let's fight back!"

In addition to inequality, Son wants to fight back against the AT&T/Verizon Wireless duopoly—a word he used several times—in the U.S. wireless market.

Son started his speech by showing slides of market share statistics. In 2008, he said, Verizon and AT&T had a 51 percent share of the enterprise market; in 2013, they had an 80 percent share.

"We cannot push back so easily, because all of the profits belong to them," said Son, flashing a slide that showed Verizon and AT&T's combined EBITDA (earnings before interest, taxes, depreciation and amortization) was 67 percent in 2008 and 84 percent in 2013.

Son recently made the same point on the "Charlie Rose" show, telling Rose, "There are two big duopolies, and they take more than 100 percent of [the] total industry free cash flow. … So here come the two little ones [Sprint and T-Mobile], who are not able to fight without enough scale, and that's no good."

While acquisition is one way to gain scale—and Sprint is working on that, trying to figure out a way to team up with T-Mobile that would receive regulatory approval—another way is to team up with partners whose service areas doesn't overlap with your own.

"You are serving the rural areas, the local communities, and we do not have overlap. If you look at the map, it's actually totally complementary. It is a situation that … structurally, we are partners," said Son.

With the CCA and the NetAmerica Alliance taking advantage of Sprint's (Softbank's, really) largesse, "Together … it is the first time we can compete against the duopolies," said Son.

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