Leap cautious on LTE

Leap Wireless International Inc. has plans, and a small test in place, for LTE service, but the carrier is looking to take a steady approach to rolling out the technology that could help the carrier reduce the cost of deployment in the long run.
Speaking at the Sanford C. Bernstein Strategic Decision Conference this week, Leap’s president and CEO Doug Hutcheson said the carrier has started to put some pieces on place for an eventual LTE rollout. Those pieces include overlaying some of its current markets with 10 megahertz of clean spectrum needed to deploy an LTE network, which Leap expects will be enough to support services for the next decade. Hutcheson also said the carrier is running a “small 4G “ network in one of its markets and expects to have a trial network in one of its markets later this year.
Leap rival MetroPCS Communications Inc. has said it plans to have commercial LTE services up and running by the end of this year and has already announced both infrastructure and device partners. Leap’s Hutcheson seemed unfazed by the advancements being made by its competitors as Leap’s current CDMA2000 1x EV-DO network is being used to support the advanced data services used by its customers.
“We like where we are on 3G,” Hutcheson said.
MetroPCS, on the other hand, has only updated its network to EV-DO capabilities in a couple of markets and thus is more interested in moving to LTE for its high-speed data needs.
Hutcheson added that Leap expects to begin broader LTE deployments in the next three to four years, starting with “hot spot” locations in high data-density market centers. The carrier said the timing should be in the heart of LTE devices gaining scalability as well as allowing network infrastructure costs to come down.
“Costs will matter in how long we wait to build out,” Hutcheson added.
Leap’s data plans appear to be of increasing importance to the carrier as its current mobile broadband offering has gained traction in the market both for its lack of a required contract as well as its $40 price point. Leap said that at the end of the first quarter it had signed up more than 600,000 customers to its mobile broadband service.
Looking to expand the return on those services, Leap’s Hutcheson said the carrier is encouraged by recent data pricing changes in the industry that has shown some upward mobility. Leap has also begun trialing different pricing plans for the service ranging in data transmission from 1.5 gigabytes to 10 gigabytes and at prices points from $40 to $60 per month. Leap currently offers a pair of pricing plans for its mobile broadband service including 5 GB of service for $40 per month or 10 GB for $50 per month. Unlike some larger rivals, Leap does not charge overage fees for customers going over their allotted bucket of megabytes and instead throttles down the speed of the service to those users.
In addition to its mobile broadband service, Leap is looking towards its EV-DO network to support the impending launch of smartphones on its network, that the carrier said it expects to help drive both customer growth as well as higher average revenues per user. The carrier has not yet announced pricing models for smartphones, though many of its rivals have begun charging a premium for devices like Research In Motion Ltd.’s Blackberry devices.
All of this talk about data has not shifter the carrier’s focus from its bread-and-butter voice offering. Hutcheson said the carrier is still looking at ways to squeeze higher margins from its unlimited voice offerings and that it still expects to see growth in the segment.
“The prepaid segment has more growth, and we tend to be a market leader in our segment,” Hutcheson noted.
Boosting that growth potential is expanded roaming coverage the carrier announced at the recent CTIA event as well as expected growth from its traditional prepaid offerings.