Just last week, Sprint finally lit up its LTE network. Not before selling a number of LTE-equipped phones, however. If you were worried about Sprint's ability to keep up with the big dogs in the race to expand LTE coverage, the WSJ has some comforting words for you. Wait, did I say "comforting"? I'm sorry, I meant worrying. Very, very worrying.
The long and short of it is, Sprint simply doesn't seem to have enough spectrum to keep up. The initial LTE rollout covered 15 markets, compared to Verizon's 330 and AT&T's 47. Despite the rather distant third-place position, Sprint hopes to have coverage in all areas by the end of 2013.
Unfortunately, covering a market isn't exactly an on-or-off type situation. In a dramatically oversimplified and probably less-than-accurate analogy, you can think of spectrum as lanes on a highway. Sprint may possess enough spectrum to open a two-lane highway in a city, but if they get enough traffic to fill a five-lane highway, they'll still need more spectrum.
Sprint is trying to offset the impending data crunch by using spectrum from its Nextel holdings. While Nextel customers have been fleeing steadily for years (as Sprint has planned for a while to phase out the brand), not all of those customers are coming back to Sprint. The brand and all associated technologies will die off by mid-2013, so perhaps Sprint may be able to get a boost both in spectrum and resources by that time, but it's too early to tell if that will be enough to satisfy consumers' growing LTE demands.
This also supposes Sprint can hold out that long. While Sprint desperately needs Nextel resources, it needs Nextel customers even more. In the Q1, Sprint reported an operating loss of $863m. No small sum, by any stretch, but even more difficult to stomach when you consider how much debt Sprint has. With over $22b in gross debt, Sprint isn't exactly swimming in cash.
Moreover, the company is contractually obligated to sell $15.5bn in iPhones per year to comply with its agreement with Apple or face penalties. The trouble is, even if Sprint succeeds in selling enough iPhones to meet its contractual obligations, it only makes it that much harder to keep the network clear enough to maintain usable data speeds for its customers.
The company is walking a very thin line right now, and could even face bankruptcy in the near future if it doesn't play its cards right. Or the company might come out on top with a fancy new LTE network and unlimited data. The company is certainly fighting tooth and nail to maintain this headlining feature. While the popular cynical opinion is that Sprint will fall in line with the big dogs and institute tiered data plans in good time, the sheer number of other features and programs Sprint has cut, as well as its current tenuous financial position, indicate that Sprint is willing to do whatever it takes to hold on to its most alluring, signature feature.
The company doesn't really have any other choice.