MetroPCS could be Clearwire's savior
CDMA operator says spectrum deal with Sprint's spurned joint venture is one option under review for its 4G strategy
Published: 17 October, 2011
With Sprint going cold on its WiMAX joint venture Clearwire, the latter will be looking desperately for new partners, and MetroPCS may be one. The CDMA operator pipped even Verizon to the post with LTE roll-out, but is severely spectrum constrained. Its CFO Braxton Carter told a Deutsche Bank conference that Clearwire could be a solution, though the cellco was examining several options.
MetroPCS has already allied itself to the other 4G wholesale start-up in the US, LightSquared, but the future of that venture's LTE roll-out remains in the balance until the FCC rules on its spectrum waiver and particularly the problems of interference with GPS. In the meantime, Sprint's decision to build its own LTE network and also share spectrum and infrastructure with LightSquared may turn Clearwire into a superior partner for MetroPCS - one in which the smaller CDMA operator could take an influential role.
Carter said MetroPCS was "uniquely positioned" to work with Clearwire and suggested that the latter's 2.5GHz spectrum would be valuable as a high capacity overlay for his firm's network in urban centers. The high frequency spectrum is best suited to dense, high capacity roll-outs, and would complement Metro's own bands. MetroPCS has already come up against spectrum limitations in some urban markets and has been forced to introduce some CDMA EV-DO carriers to add data services efficiently, whereas it had hoped to skip from 2G to LTE directly.
In a research note, Credit Suisse analyst Jonathan Chaplin wrote that MetroPCS was unlikely to commit itself until it was known whether AT&T would succeed in taking over T-Mobile USA, in the face of the Department of Justice's lawsuit. The conditions attached to the acquisition might include the divestment of significant amounts of spectrum, which MetroPCS could acquire rather than working with Clearwire.
As well as LightSquared or outright purchase of frequencies, another option mentioned by Carter was a deal with SpectrumCo, a group of three cablecos (Cox, Comcast and Time Warner Cable) which spent $2.4bn on AWS licences in 2006. The trio has so far shown no signs of using the spectrum. Two of the partners, Comcast and TWC, are also Clearwire customers as well as Sprint MVNOs, while Cox recently reversed a plan to build out its own 3G network. If the cablecos remain loyal to Clearwire, they could create a multifaceted alliance with MetroPCS (and possibly its roaming partner Leap), usurping Sprint's former position.
The other wholesaler, LightSquared, said that it has enough cash to operate through the first quarter of 2012 but is unlikely to be able to raise further funds until the FCC makes its decisions. Speaking at the same Deutsche Bank conference, CFO Michael Montemarano said that the company had been weighing its various options and could "extend the runway of cash" if necessary.