Telecoms Tech

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Every which way...is that a technical strategy

With the possibility of piling-on, the last two weeks have been precious in terms of technical and business strategy gone awry.

Friday, it was announced that Sprint's Board of Directors decided to turn against a Several Billion dollar deal to buy MetroPCS.  From a strategy perspective, you could ask what the Sprint-Nextel's CEO Dan Hesse was thinking?  This failure also comes on the heels of the virtually certainty of LightSquared being denied any useful operating license by the FCC.  Remember, LightSquared was going to pay Sprint $9 Billion in cash over 11 years to build the LightSquared network and Sprint would also get $4.5 billion in network usage credits.

Sprint announced its own over $7 billion LTE network upgrade recently, so why all the confusion?

Oh, but there is more.  Google announced that it is going to essentially abandon its investment in Clearwire, for a loss of nearly $500 Million.  As I discussed earlier in Early Adopters Don't Always Win Update, WiMAX technology that Sprint was getting from Clearwire did not live up to the 4G marketing hype from WiMAX proponents, Sprint, or Clearwire.  Clearwire posted a loss of $237 Million for the 4Q2011 and even went as far to say that their revenue will likely stay the same or even fall during 2012.  Clearly, this is amazing as the number of LTE subscribers and others using HSPA+ and CDMA Rev. A is rapidly expanding along with revenue (profits may be a different matter, of course).

So again, what does this mean technically?  Sprint purchased Nextel in 2004 to gain new customers and get scale to help it compete.  Not learning from the difficulty in integrating two different wireless standards in a swing for the seats $35 Billion deal, Spring seemingly has ignored real technical innovation and planning for more swing for the seats deals including

  • pouring billions into Clearwire (both in stock and in must pay service agreements)
  • several billion dollar LightSquared transaction (hmmm....is this being done by ex-Worldcom people?)
  • $15 billion deal with Apple for iPhones
  • failed attempted transaction for MetroPCS for nearly $8 Billion


Right now, a company that was once known for technical leadership (one of the first GSM companies and rapid transition to 3G CDMA) may now be known for a series of done and would-be-done financial transactions to try to build the company into a fierce competitor.

Maybe concentrating on its own network (technology and buying spectrum), improving its marketing, and looking for some other technical differentiation would allow it to grow and keep its customer base.  Just a thought.

About 2 years, 1 month ago - 0 comments
Categories: Industry, Operators
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