Leap exec explores network sharing for smaller U.S. operators

GUANGHZOU, China – Network sharing among smaller U.S. operators could create a strong venture that would be able to compete against today’s large incumbent operators, although that concept is just a concept today.
Leap Wireless International Inc.’s (LEAP) Matthew Stoiber described how a network-sharing agreement among the nation’s regional operators could result in a new operator that would have enough spectrum to compete against U.S. powerhouses AT&T Mobility and Verizon Wireless. Stoiber, VP and GM of device development at Leap, cautioned the audience at The Global CDMA Operation and Development Forum 2011, that his presentation was merely fodder for average-sized carriers to consider, adding that Leap had not entered into any such deals, but that the topic could create competition in a 4G environment. The conference, sponsored by China Telecom and Huawei Technologies Co. Ltd., followed the CDMA Development Group’s annual conference in Guanghzou, China.
Like many other operators, Leap is facing challenges keeping up with the increased data demands that are arising from smartphone use. About 40% of Leap’s new customers are buying smartphones, even though the flat-rate carrier cannot subsidize the devices significantly. Further, Stoiber noted, another 20% of its subscriber base is migrating to smartphones. Building out a new nationwide network in the United States would take about $9 billion. Spectrum is scarce and over-the-top content providers like Google Inc. and Apple Inc. are trying to control content and the associated revenues that come from that content.
So while the smaller U.S. operators separately don’t have the scale to compete with the nation’s top two operators, if they collectively pooled their resources, they would have enough bandwidth to compete. Sprint Nextel Corp., Leap, MetroPCS Communications Inc., TerreStar and LightSquared together would have 80 megahertz of spectrum able to support up to 120 million subscribers. TerreStar and LightSquared have not yet turned on commercial services but have spectrum. That spectrum could also be used by mobile virtual network operators to offer services to companies that want their own brand of wireless service, but do not want to build their own systems
“In concept it truly is the right idea,” Stoiber said.
Leap estimates about 25% of customers are up for grabs. Going forward, customers will care about quality of experience, not quality of service, about mobile Internet, not mobile broadband, and about applications not data bits.