Sprint and LTE technology provider LightSquared announced a 15-year deal Thursday that gives Sprint $9 billion in cash, primarily for spectrum hosting and LTE network services it would provide LightSquared.
Sprint also has the option to buy LTE capacity from LightSquared, which could allow Sprint to move beyond its current commitment to Wimax as a fast 4G network service. And the deal allows LightSquared to use Sprint's existing 3G network to provide roaming data services to LightSquared's wholesale 4G customers.
LightSquared had been rumored to be working with Sprint on the deal for weeks, even as LightSquared has come under fire for potentially posing GPS network interference problems from its proposed LTE technology. LightSquared expects to launch that technology in U.S. markets in 2012.
In an e-mailed statement, LightSquared today said it would launch 4G LTE services "only when there is a comprehensive solution in place that satisfies federal agencies and protects millions of consumers who use GPS every day.... LightSquared has proactively decided to move the launch of its network to a new slice of spectrum which resolves the GPS interference issue for 99.5% of all commercial GPS devices."
The company went on to say it is "committed to finding a solution to resolve the relatively small number of GPS devices that would still be affected after LightSquared's frequency move. LightSquared has concrete proposals for resolving this problem."
The issue of any remaining interference remains for the Federal Communications Commission to determine, Sprint and LightSquared said.
Dan Hays, a partner at PRTM, a consulting firm, said the Sprint-LightSquared deal "presents tremendous opportunities for both companies" by reducing network deployment costs.
For Sprint, which has seen other carriers such as AT&T and Verizon Wireless move to LTE technology, the opportunity is enormous, Hays added. "The deal...blows open the doors for Sprint to shift its attention to the increasingly-popular 4G LTE technology. Although Sprint was an early supporter of the competing WiMax technology and had benefitted from its access to Clearwire's 4G WiMax network, LightSquare provided an important option for Sprint to align with the rest of the world, which is rapidly moving towards the competing LTE technology."
LightSquared said it will save $13 billion over eight years by using Sprint's network infrastructure, including cell towers and cell sites and other terrestrial locations. It already has a satellite operational to serve its wholesale LTE network services and is building an independent core network, according to a statement.
In the agreement, Sprint will be paid to deploy and operate the nationwide LTE network, which will be available to LightSquared. LightSquared can then sell the LTE capacity to Sprint or other wireless carriers or partners. LightSquare plans to make LTE services available in underserved rural markets through deals announced with Open Range, Cellular South and SI Wireless.
Sprint also gets credits valued at $4.5 billion should it decide to use the 4G LTE network; Sprint has the opportunity to purchase up to half of LightSquared's expected LTE capacity.
Matt Hamblen covers mobile and wireless, smartphones and other handhelds, and wireless networking for Computerworld. Follow Matt on Twitter at @matthamblen or subscribe to Matt's RSS feed. His e-mail address is email@example.com.