Sprint Nextel and Clearwire plan to make their future 4G LTE networks compatible with each other. Both companies are in the process of completing a commercial agreement under which Sprint could access Clearwire’s network for additional capacity. Sprint revealed the non-binding memorandum of understanding (MOU) on Wednesday, which helped to clear up the opacity surrounding the relationship between the two companies. Clearwire presently provides Sprint’s 4G services through its WiMAX network.
Sprint owns the majority of Clearwire’s shares, but both companies announced plans for their LTE networks separately. Clearwire stated in August that it plans to overlay its WiMAX network with the LTE network for around $600 million. Additionally, both Sprint and Clearwire will be using different types of LTE networks. Sprint will be focusing on the FD- LTE (frequency- division), which transmits signals over different frequencies. Clearwire will be utilizing the TD- LTE (time- division), which transmits and receives signals over the same frequencies.
If a binding business deal is reached between the two, Sprint stated that it would start purchasing LTE capacity from Clearwire in 2013 to augment its own network, which is set to launch commercially next year. Under the present MOU, the two companies have agreed to cooperate on handoffs between their future networks, chips to be used in device and on the sites for building base stations.
Sprint, already facing financial difficulties, hopes to control its fixed network costs by offloading data traffic to Clearwire’s network, which has potential for growth as Clearwire holds more than 100MHz of spectrum in markets across the U.S. Sprint also has $9 billion deal with the LTE startup LightSquared (which though embroiled in a dispute with GPS) will give Sprint additional LTE capacity if Lightsquared is allowed to build its LTE network. The deal with LightSquared would allow Sprint to meet its LTE capacity needs for a year, but the agreement with Clearwire would give Sprint multiple years of meeting needs without having to build more capacity of its own.