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.

The company that is in the best position to prove that assumption true is Mr. "Can you hear me now?": Verizon Communications (NYSE: VZ  ) .

Verizon's closest rival in terms of LTE coverage is -- no surprise -- AT&T (NYSE: 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-upon Sprint Nextel (NYSE: S  ) , which uses a different 4G technology called WiMAX. Sprint uses its partner Clearwire's (Nasdaq: 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 (NYSE: 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 (NYSE: 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 (NYSE: 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.

Keep an eye on where these companies are heading by putting them on My Watchlist.

Fool contributor Dan Radovsky owns shares of AT&T. The Motley Fool owns shares of China Mobile. Motley Fool newsletter services have recommended buying shares of China Mobile and AT&T. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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  • Report this Comment On October 24, 2011, at 11:39 PM, almypal817 wrote:

    Verizon does not have a bright future at all. They have so much debt. They owe their partner Vodafone alot of money. Just because they put LTE first doesnt mean anything. The voice LTE phones are still not out yet. AT &T is in a much better position. They deployed HSPA speeds much faster than 3g which is what Verizon has in the non LTE areas. AT&T will have LTE and HSPA speeds all over the USA

  • Report this Comment On October 25, 2011, at 12:42 AM, Aryabod wrote:

    ATT and VZ have $80 and $60 billion in Debt while Sprint's net debt is less than $15 billion. On another note Sprint will have 120 million POPS of LTE 4G and 130 million POPS of Wimax 4G infrastructure available by the end of Q2 2012 and 280 million POPS of LTE 4G by the end of 2013.

  • Report this Comment On October 25, 2011, at 9:37 AM, mnosense wrote:

    Dan, how much do you know about LTE and WiMax? I mean other than the different terms, did you ever read more about it?

  • Report this Comment On October 25, 2011, at 1:30 PM, spokanimal wrote:

    Some Clarifications for Dan;

    1. Clearwire's network currently serves about 132 million POPs, not 120 million as Dan states.

    2. Clearwire added 1.9 million subscribers in Q3 whereas Verizon added 1.3 million. Since Verizon has many platforms besides LTE, it's conceivable that Verizon added half as many 4G subs as Clearwire did.

    3. Sprint is removing it's "unlimited" 4G offering for every device except smartphones. Since the unlimited offering was arguably the feature that has allowed the WiMax network to continue beating out Verizon's LTE, it's fair to say that the change is another in a LONG LINE of Dan Hesse Gaffe's that could well destroy Sprint.

    4. Clearwire's plans to build an LTE network isn't just any "vanilla" LTE... It's LTE-Advanced running with a TDD (Time Division Multiplexing) format on 40 mhz channels at 100 megabit speed... or around 10 times the speeds that Verizon gets with vanilla LTE... or that Sprint will get with the LTE they've decided on INSTEAD of Clearwire's LTE-Advanced (again, another Dan Hesse Gaffe). Clearwire is the only carrier with sufficient spectrum holdings to run LTE-Advanced on 40 mhz channels (20x20) and they have sufficient spectrum to run DUAL, 40 mhz channels... which will allow them to avoid speed degradations, plan caps or throttling for many years to come.

    First, Sprint bought Nextel (aughh)... then they jumped the gun with WiMax (double-aughh)... then they chose "vanilla" LTE over Clearwire's LTE-Advanced on infrastructure that they'll need to spend $2 billion on just to REPLICATE the 2010-vintage infrastructure that Clearwire already built (tripple-aughh)...

    ... and now Dan Hesse is dropping unlimited WiMax plans on the very types of subscribers that have allowed him to compete with Verizon... (quadruple, double-dog-dare-ya aaauuugghhh!)

    I swear Dan Hesse is taking payoffs from Verizon... how else can you explain that kind of lunacy?

    S

  • Report this Comment On October 25, 2011, at 2:05 PM, XMFDRadovsky wrote:

    Hey Folks,

    I appreciate all of your comments, and I wanted to make a couple of factual corrections here.

    First, I misstated the number of Clearwire's potential customers. It is 135 million. I gave you last year's figures.

    Next, I heard from the company on its agreement with China Mobile, which "... is limited to cooperating on developing the multi-modal TD-LTE ecosystem. We are not assisting them with building an LTE network in China as part of this agreement."

    Sorry about the misinformation. I always want to get the facts right.

    Dan

    ps To mnosense: yes, as far as a non-engineer can, I do believe I do understand the differences between WiMAX and LTE, including TDD-LTE, FDD-LTE, and LTE-Advanced.

    But this article is meant to give investors information that may affect their investments. It is not meant to get down to the component level of a printed circuit board.

  • Report this Comment On October 25, 2011, at 2:31 PM, elkabong453 wrote:

    Great information but what affect, if any, is LightSquared (or LightRadio--I've seen both terms and don't know the difference) likely to have on this situation as it develops? Will it turn out to be the Joker in the deck?

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