4G World: Sprint exec on why it chose not to tackle 4G alone

At his keynote at 4G World in Chicago, Sprint (NYSE:S) president of strategic planning, corporate initiatives and CDMA Keith Cowan tried to shed some light on why Sprint chose to partner with Clearwire (NASDAQ:CLWR) and a myriad of others for 4G while its competitors are building their own 4G networks alone. Sprint needed to find away to disrupt the business of its larger competitors Verizon Wireless (NYSE:VZ, NYSE:VOD) and AT&T (NYSE:T) and chose to do so by supporting an entity that can reach a much larger market than Sprint could alone, Cowan said.

When Dan Hesse took over as CEO of Sprint in early 2008, he decided that Sprint was now too small to compete directly with AT&T and Verizon on their own terms, Cowan said, so his strategy was to change the terms. Sprint started with its Simply Everything plan, which bundled unlimited voice, SMS, Internet and mobile data services into a flat-rate $100 plan and followed it up with a similar prepaid program with Boost Mobile. Most of Sprint’s new devices, service plans and initiatives have all fit with that new strategy Cowan explained, and the 4G strategy is no exception.

“If Sprint wanted to be the undisputed leader in 4G, why did we do the Clearwire deal?” Cowan said. “Sprint did not have the time and the scale to take on our two larger competitors without being different. … What Dan would say is, ‘We needed to deploy nukes to beat our competitors.’”

By joining forces with Clearwire, Sprint not only pooled its spectrum resources with other major holders of 2.5 GHz spectrum, it managed to raise capital from some of the largest players in the Internet, computing and broadband industries. Intel (NASDAQ:INTC), Google (NASDAQ:GOOG), Comcast (NASDAQ:CMCSA), Time Warner (NYSE:TWC) and Bright House Networks didn’t just fork over the $3.2 billion to build the network, they gave their commitments to develop WiMax technology and services and sell it to their customers, Cowan said.
Combined Sprint, Comcast and Time Warner have 110 million customers to whom they can market the Clearwire service while sharing the costs of deploying it. Intel has agreed to not only support the ecosystem but build WiMax into its laptop platforms and future netbook and mobile Internet device architectures, thus ensuring a portfolio of devices is available. And Google is targeting its mammoth ad-supported Web application and services portfolio at new WiMax world, Cowan said.

Cowan said the decision amounts to a definitive shift in business model—away from carrier-owned, closed networks and toward open, shared networks in which multiple parties can leverage the same network resources.