By Chris Brantley | March 30, 2014
Recently Sprint Chairman Masayoshi Son fired a shot that may have sent a shiver up the spines of Verizon , AT&T , and Comcast. In a speech to the U.S. Chamber of Commerce, Son, who is also chairman of SoftBank, which owns 80% of Sprint, said it plans to develop a wireless broadband service to take on cable and fiber broadband providers, like Comcast and Time Warner. If Comcast and Time Warner successfully merge, they'll have almost 40% of U.S. broadband subscribers.
Changing the game
Some pundits took this as bluster to sway regulators to consider Sprint's possible acquisition of T-Mobile US in a broader context, including not just wireless carriers but also cable providers. However, if Son was serious and Sprint can accomplish the feat, it could shift a huge amount of capital from fixed-line broadband providers to wireless broadband providers. It could also fundamentally change the relationship between content distributors, like Netflix, and cable providers. Finally, if the price is right it could bring more subscribers to Sprint.
Taking advantage of the opportunity
Sprint has two advantages over Verizon and AT&T. First, it hasn't sunk billions into cable and fiber lines, like AT&T (U-verse) and Verizon (FiOS). So Sprint may be willing to take the risk and upfront financial hit to reap a long-term gain in market share against the number one and two wireless carriers.
In addition, Sprint has 184 MHz of spectrum, which is more than Verizon (83 MHz) and AT&T (77 MHz) combined. However Sprint has yet to take advantage of the spectrum in a meaningful way. The Sprint 4G network is notoriously slow in comparison to its chief competitors.
In layman's terms, spectrum is the invisible communication signals that travel through the air by radio frequency. Television broadcasters, radio stations, and government agencies, as well as mobile broadband providers, use it to distribute their programs and data. However, it's a finite resource that is controlled and parceled out to wireless carriers by the government and it's in short supply.
Although the FCC has plans to free up more spectrum for broadband use, it remains to be seen if it will go to the highest bidder (helping the market leaders like Verizon or AT&T) or be allocated thorough some other system (giving Sprint, T-Mobile, or other lesser competitors a shot).
In a perfect world, more spectrum should lead to a faster, more reliable wireless network, but it's actually a more complicated process than that. Certain types of spectrum are of a higher quality and easier to work with. I'll spare you the technical mumbo jumbo and leave it at this: Sprint's inability to maximize its spectrum with a faster and more reliable LTE network hasn't inspired much confidence in the marketplace or grown its subscriber base. Sprint lags way behind Verizon and AT&T based on the speed and reliability of its current network, according to a recent study by RootMetrics.
Increasing speed and reliability
To overcome the cable and fiber providers, Sprint or any other wireless carrier needs to be as fast and reliable as the fixed lines. The cost of the service also has to come down substantially.
According to some academics and tech companies, the capability to provide speed and reliability to match the cable providers is right around the corner. Currently, Sprint's Spark wireless network has speeds that compare to middle of the road Comcast plans. Spark sends around 50 to 60 megabits per second, but Sprint claims the technology is in place to reach speeds over two gigabits per second.