After conducting tests of their new long-term evolution 4G network in Los Angeles and Orange County, California earlier this fall, Sprint (NYSE: S) has officially rolled out their new high-speed wireless network. The Sprint 4G network launched today in 61 markets, the bulk of which are centered around the smartphone-dense New York City area.
According to a press release from the telecom, the new network offers web browsing, app downloading, and video chat that is 10 times faster than Sprint’s 3G network. Sprint is also offering a variety of smartphones tailor made for the high-speed network, including Samsung Epic 4G and HTC Corporation’s EVO 4G. Sprint is also emphasizing the Overdrive 4G’s—Sprint’s proprietary mobile hotspot device—compatibility with Apple Inc.‘s (NASDAQ: AAPL) iPad though the company doesn’t yet officially sell the popular tablet.
What is most notable about the launch of Sprint’s network is that it comes months in advance of the launch of 4G Networks from its competitors. Verizon (NYSE: VZ) announced the launch details for their 4G LTE network just a few short weeks ago during a press conference with the Associated Press. The company plans to launch in 60 airports and 38 cities over the course of next year, and it’s unlikely that it will launch in high-density areas all at once unlike Sprint’s new network. This is because Verizon believes that it has yet to exhaust the potential in its existing 3G network that the company plans to continue expanding into next year even as the new 4G network is launched.
Given the steady growth in the existing 3G smartphone market—the number of smartphone users across all major carriers in the United States has grown +50% between September 2009 and September 2010—Verizon is wise to slowly pursue its 4G network strategy, especially if last Friday’s Forbes report that Verizon will support a version of Apple’s iPhone 4 compatible with their CDMA 3G network turn out to be true. AT&T (NYSE: T) meanwhile is conducting tests of their 4G network in Dallas and Baltimore. The current exclusive carrier of Apple’s iPhone will also be slowly rolling out their network over the course of 2011, working on long term plans with partners Alcatel-Lucent (NYSE: ALU) and Ericsson (NASDAQ: ERIC) to make sure that their 4G network launches without the hiccups that accompanied its 3G network’s launch.
The early launch of Sprint Nextel’s 4G network likely won’t improve the company’s share of the mobile market, at least in the short term. Their competitors are simply seeing too much growth thanks to 3G technology to think that the fledgling east coast, high speed network will have a great impact on the market in the last quarter of 2010. AT&T added 2.6 million subscribers to its mobile service in the third quarter of 2010, compared to Sprint Nextel’s 644,000. A faster network that only supports a small array of devices simply won’t have the impact on AT&T that Sprint needs. Early tests of Sprint’s 4G network in California also reportedly put a terrible strain on existing handsets battery life, so the telecom has technology hurdles to overcome as well. Investors should take note of the rollout insofar as it should provide a preview of the mobile technology market coming in the next eighteen months. But this is by no means the time to buy Sprint.
As of this writing, Anthony Agnello did not own a position in any of the stocks named here.
