T-Mobile USA, Clearwire expand networks; tie-up in the works?

The race to expand the presence of high-speed wireless data services received a boost from two operators as both T-Mobile USA Inc. (DTEGY) and Clearwire Corp. (CLWR) announced new market launches.
T-Mobile USA Inc. said it expanded its HSPA+ network to a handful of new markets pushing the networks total coverage past the 100 million potential customer covered mark.
The carrier said the service was now available in 55 major metropolitan areas with the launch yesterday of service in Boston; Erie, Pa.; Fresno, Palm Springs and San Diego, Calif.; Miami; Richmond, Va.; Spokane, Wash.; and Topeka, Kan. T-Mobile USA’s HSPA+ network is capable of providing network speeds up to 21 megabits per second, with the carrier saying it planned to increase those theoretical speeds to 42 Mbps next year in addition to increasing network coverage to more than 200 million pops.
Meanwhile, Clearwire said it expanded its WiMAX-based network to Boston; Providence, R.I.; and Daytona Beach, Fla. (By default, the expansion also bolsters Sprint Nextel Corp.’s (S) “4G” offering as the carrier owns a controlling interest in Clearwire.) The expansion pushed the carrier’s network to 52 markets and 60 million pops covered on its way to covering 120 million pops by the end of the year.
Clearwire noted that its WiMAX network provides network speeds in excess of 10 Mbps, with average downlink speeds of around 6 Mbps.
Network intrigue
While T-Mobile USA and Clearwire continue expanding their respective networks , published reports indicate that the two operators could be inching closer to a network or spectrum agreement.
The Wall Street Journal is reporting that Sprint Nextel, which though owning a controlling stake in Clearwire has said it does not have control over the company’s board of directors, is debating whether to let Clearwire sign a deal with rival T-Mobile USA.
The deal could include either leasing capacity on Clearwire’s network or for Clearwire to sell spectrum to T-Mobile USA.
Clearwire has said it was currently funded to complete its planned 120 million pop coverage by the end of the year, but recently noted that it was looking at other opportunities to fund further build out, including possibly selling some of its vast spectrum holdings. Analysts were mixed on that possibility, noting that spectrum is the wireless industry’s most valuable asset and that Clearwire’s vast holdings are its trump card.
The Wall Street Journal story indicates Clearwire would need around $4 billion in funds to push its build out plans past 200 million pops. Dan Hays, partner at global management consulting firm PRTM, noted this week following Clearwire’s launch of its Rover prepaid offering, that network expansion has to be at the top of the priority list for Clearwire.
“Right now it’s a race to the top for 4G coverage,” Hays said. “For Clearwire it has to be a top priority to get more markets launched.”
T-Mobile USA is currently rolling out updates to its UMTS/HSPA-based 3G network using the AWS spectrum the carrier acquired in 2006, but still lacks the spectrum portfolio to roll out a dedicated “4G” network based on an all-IP core. The carrier has said it would be interested in a partnership to help facilitate its 4G plans.
Clearwire’s current network partners, including Comcast Corp., Time Warner Cable, Google Inc., Bright House Networks, Best Buy Co. Inc. and Cbeyond don’t compete directly with Sprint Nextel in the cellular space.
Clearwire has also recently announced it would begin trialing LTE technology on its network in the Phoenix area in preparation for possibly adding LTE services onto its network. Clearwire has steadfastly said it would continue to support its WiMAX service, but the addition of LTE would open the carrier up to a broader equipment base.
A move to LTE would seem to make more sense for T-Mobile USA as its parent company, German telecom giant Deutsche Telekom AG, is looking at LTE for its international wireless plans.
Further complicating the matter for Clearwire is Harbinger Capital Partners’ recent LightSquared announcement, that calls for the company to begin deploying an LTE-based network in 2011. LightSquared has said it plans to lease capacity on its network to partners interested in offering LTE services.