Which Mobile Telecom Has the Brightest Future?
The technology most sought after by broadband wireless users is called Long Term Evolution, simply referred to as LTE. It is the fastest of the fourth-generation, or 4G, transmission frameworks, and the common wisdom assumes that the first carrier to build a nationwide LTE network would clean up.
Verizon's closest rival in terms of LTE coverage is -- no surprise -- AT&T (NYS: T) , but "close" in this case is only relative. Verizon got such a head start that its current LTE footprint covers 165 markets populated by more than 186 million people. AT&T has only five markets.
But Verizon's closest 4G rival may not be so obvious. It's the much put-uponSprint Nextel (NYS: S) , which uses a different 4G technology called WiMAX. Sprint uses its partner Clearwire's (NAS: CLWR) WiMAX network to 71 markets with a potential 120 million customers.
Unfortunately for Sprint, which was the first national carrier to deploy any kind of 4G coverage, it chose the wrong technology. The boost it got from getting there first has evaporated, and it now it finds itself in a desperate struggle to build an LTE network.
MetroPCS (NYS: PCS) , though only one-tenth the size of Verizon, has also built an LTE network. But to get to 4G it completely bypassed 3G, feeling that the technology would just be a short-lived precursor to 4G. It chose not to go with the WiMAX version of 4G because, as Roger Lindquist, the chairman and CEO of MetroPCS (NYS: PCS) , told FierceWireless, "No one is touching WiMAX; that's as toxic as it gets."
That's a feeling that Clearwire can now appreciate, as it sees its survival hinging on whether it can get the $600 million it needs to upgrade its network to LTE. There hasn't been anybody throwing money at Clearwire yet, but the company has entered into an agreement with China Mobile (NYS: CHL) to help that wireless carrier build an LTE network in China and also create a multimodal ecosystem. Such a system would allow handsets to be able to receive data from different wireless technologies.
So it looks like the LTE network king in the U.S. is currently Verizon, and its position is getting stronger. It will be expanding its network to 178 markets by the end of this year and plans to have it completed by 2013. Clearly, AT&T and the others will have a lot of catching up to do ... unless they're counting on LTE, like WiMAX, to also go "toxic" in the near future.
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At the time this article was published Fool contributorDan Radovskyowns shares of AT&T. The Motley Fool owns shares of China Mobile.Motley Fool newsletter serviceshave recommended buying shares of China Mobile and AT&T. Try any of our Foolish newsletter servicesfree for 30 days. We Fools don't all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.
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