Sprint and LightSquared: What The Network Deal Means

Earlier today, weeks of speculation were formally confirmed when Sprint and LightSquared announced a new network deal worth up to $15 billion for Sprint in cash and network access credits, while LightSquared will use the carrier’s newly reconfigured network under the Network Vision initiative to build out its L-Band based hybrid satellite-terrestrial wholesale LTE network.

The deal also allows Sprint to purchase of to 50% of the completed network’s total capacity for its own use to sell access to its customer base, while allowing LightSquared access to Sprint’s 3G network in order to provide additional roaming coverage as well as the right to wholesale the same access to other customers.

As a result of the new deal, the network buildout is expected to be completed by 2014, a full year before the FCC’s mandate that the network be completed in or by year-end 2015 as a condition for being granted the necessary waivers to build and roll out the satellite-based network to 250 million people by the aforementioned timeframe.

For Sprint, this means that it now has an easier path to transition to LTE for its own network upgrade path from CDMA rather than waiting on Clearwire to decide on its ongoing tests whether to stay with WiMax or move to LTE as well and is considered a better path than undertaking its own buildout and transition with its limited capital compared to the other carriers that have also placed their bets on LTE.

For LightSquared, this gives the upstart network access wholesaler the infrastructure necessary to keep to its timelines and milestone scheduling necessary to roll out the LTE network as quickly as possible with the addition of 3G CDMA roaming for its equipment and wholesale customers while addressing speculation that it would have trouble finding partners for its goals and continuing issues concerning GPS interference, which it has yet to resolve.

However, before the deal can even begin to come to fruition, it must be approved by both federal regulators and the FCC, with LightSquared still having yet to deliver a coherent plan to the aforementioned body on how it will resolve the GPS interference issue that is currently holding up further progress on its network buildout and tellingly, both Sprint and LightSquared were silent on the issue this morning in both announcements to the press.