Sprint Nextel (NYS: S) may have to drop its key market differentiator -- unlimited data plans -- when it deploys LTE network technology next year, according to analysts. However, Sprint insists that such a move is not necessary.
Sprint's initial LTE deployment, expected by June 2012, will be in the G-Block of the 1900 MHz band, where Sprint has a nationwide 5X5 MHz block of spectrum. Verizon (NYS: VZ) Wireless has a nationwide 10X10 MHz block in the 700 MHz band, and AT&T (NYS: T) Mobility has 10X10 MHz block in some markets and a 5X5 MHz block in others. That spectrum gap could put pressure on Sprint's LTE network once it gets loaded with devices, since network capacity is directly related to the amount of available spectrum.
(At some point in the future, Sprint also plans to use its 800 MHz for LTE; the carrier currently uses 800 MHz for iDEN but will begin moving those customers off that spectrum by 2013.)
"It's a very bare-bones implementation of LTE," Tolaga Research analyst Phil Marshall told Reuters. "The risk is, if you don't have headroom as your LTE subscriber base grows, then the speeds will go down. Unlimited is going to kill them. I think they're going to have to back off from the all-you-can-eat plan."
One solution would be for Sprint to institute data caps on its LTE smartphones that offer higher data allotments than ones being offered by Verizon and AT&T. (Verizon offers 2 GB for $30, 5 GB for $50 and 10 GB for $80, while AT&T offers 200 MB for $15 and 2 GB for $25.)
Sprint, for its part, insists that moving away from unlimited data plans is not something it is contemplating for LTE. "I don't consider it a headache," Bob Azzi, Sprint's senior vice president of networks, told Reuters. "We have a good understanding of the nature of those plans and what they do." Azzi also said that because Sprint will deploy LTE-Advanced technology, it will be able to more efficiently use its network capacity.
However, Sprint has already begun moving away from unlimited offerings. Beginning this month, Sprint said that mobile broadband devices -- tablets, USB modems, mobile hotspots and netbooks -- will no longer have unlimited access to Clearwire's (NAS: CLWR) mobile WiMAX network. The new plans do not apply to smartphones, which still have unlimited data plans. The move likely represents an attempt by Sprint to reduce its payments to WiMAX wholesaler Clearwire, which charges its customers based on subscribers' data usage.
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