NEW ORLEANS – Leap Wireless’ remains focused on its smartphone future, with plans to rollout several new models this year targeting both the high-end of the prepaid market as well as entry-level models designed to entice consumers into the revenue-generating segment. All of this while still working towards broader LTE deployment plans that should eventually allow the carrier to lower its cost of supplying bits to those consumers.
Speaking at the recent CTIA event in New Orleans, Leap’s SVP of devices, Matthew Stoiber, explained that the carrier was looking to roll out a sub-$300 LTE-enabled smartphone by the end of the year that would take advantage of the carrier’s expanding LTE network. That network, which is currently limited to commercial service in Tucson, Ariz., is expected to reach 25 million potential customers by the end of the year. Those LTE plans are set to be further bolstered through an LTE roaming agreement with Clearwire that could take effect sometime following its rollout of LTE services across its 2.5 GHz band beginning next year.
Stoiber noted that while less expensive smartphones have been big sellers for the carrier, it has been surprised by the take rate of high-end devices, noting that the recently launched Huawei Mercury was three-times better than expected. The carrier will also continue to focus on Android-powered devices, at least for the near term, though Stoiber added that the carrier has been impressed with Microsoft’s latest Windows Phone operating system and is looking towards refreshed BlackBerry devices coming to market later this year.
“We want to be relevant and support what our customers want to buy,” Stoiber explained.
Leap’s focus on no-contract offerings continues to keep it on the outside looking in regarding Apple’s iPhone, despite recent expansion of the device to a handful of CDMA-based regional carriers.
While the carrier focuses on smartphones, Stoiber said it would likely trim its feature phone portfolio down to three devices, though all those models would include CDMA2000 1x-Advanced technology that would allow for greater efficiency on the carrier’s legacy CDMA network.
As for its LTE network plans, Leap remains committed to rolling out services in tune with its smartphone plans. Steve Reifschneider, VP of LTE for Leap, noted that the carrier would begin to expand the service as devices compatible with the network came online.
The carrier is using its 1.7/2.1 GHz spectrum assets for the service, which puts it at the forefront in deploying the technology across that spectrum band. Traditionally a fast follower, Leap, as well as MetroPCS, have been leading the charge for LTE in the AWS spectrum bands that are expected to eventually be supported by larger operators Verizon Wireless, AT&T Mobility and T-Mobile USA. Leap is also planning to use 700 MHz spectrum it’s looking to exchange with Verizon Wireless to rollout the technology in Chicago.
While the carrier waits for LTE-equipped smartphones, current testing continues with wireless modems that have remained a small, but shrinking portion of the carrier’s traditional business. Reifschneider noted that the deployment of Ethernet backhaul remains a big piece of its LTE rollout and support.
As for LTE challenges, Reifschneider explained that SIM card activations have been one of the more surprising issues it has had to face as its legacy CDMA network did not rely on the chips for activation or interaction with the network.
Bottom Line: Leap’s focus on smartphone growth remains a double-edged sword for the carrier as it balances the increased revenue generated by the devices with the extra costs in subsidizing those devices and the need to spend more on network capacity to handle usage. However, with competition in the mobile space, and more specifically the prepaid space increasing, there is little choice the carrier has but to continue down that path. Many analysts note that road will eventually lead to some sort of network sharing, joint venture or even an exit strategy for Leap if it wants to remain a viable entity in the mobile space.
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