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Sprint Nextel Corp
In Apple’s (AAPL) grand unveiling of the new iPad on Wednesday, it named its old pals Verizon Wireless and AT&T (T) as the initial carriers for the mobile version of the device, but Sprint (S) and T-Mobile (DTE:GR) were absent from the list. This wasn’t a huge shock. One of the iPad’s key features is its LTE radio, and neither Sprint nor T-Mobile has an LTE network to speak of yet.
You might assume that when their LTE networks do go live this year, they will next be welcomed into the iPad fold (and, more important, a future iPhone with LTE). That won’t necessarily be the case. LTE is a whole new ballgame. The old 3G rules that determined which carriers were blessed with Apple’s devices don’t apply in 4G. In this new LTE order, the two operators may reverse roles, with T-Mobile landing its first iPhone and Sprint being left out in the cold.
Of all the operators, Sprint has the funkiest LTE setup. It is the only operator to launch its LTE network over PCS spectrum, which is traditionally reserved for 2G and 3G services. What’s more, Sprint plans to add LTE capacity by tapping into Clearwire’s future TD-LTE network, which uses not only completely different spectrum but also a variant of LTE technology that neither Apple nor any handset maker has yet to support. To bring Sprint fully into the iPhone and iPad fold, Apple would need to design custom versions of those devices for the carrier. Apple is certainly willing to do that for mammoth operators such as AT&T and Verizon—as evidenced by the two different LTE versions of the iPad it just released. Sprint might be too small to make the cut.
That’s not to say Sprint won’t have access to a new iPhone. It’s a practical certainty that it will, given the four-year, 30.5 million-unit commitment Sprint has made to Apple to sell future devices. But those phones may just function in CDMA mode, making the LTE radios they contain useless weight. This is basically the approach Apple is taking with the iPad internationally. The iPad + 4G has already popped up on Apple’s U.K. website, along with a long list of supported carriers: Orange (FTE:FP), Vodafone (VOD:LN), O2 (TEF), T-Mobile, and 3UK (13:HK). Everyone else gets the AT&T version of the new iPad—with the LTE radios turned off.
I’m not saying a Sprint LTE iPhone is impossible. It’s a question of whether it can leverage its big commitment to sell more iPhones against Apple’s historical unwillingness to split its product lines. The sale of 30.5 million iPhones may seem a lot, but that’s spread out over four years. In terms of global sales, that’s a single good quarter for Apple.
Once Apple opened its portfolio to CDMA last year, T-Mobile became the orphan of the U.S. wireless industry, as no version of the iPhone supported HSPA in its AWS bands. T-Mobile, however, will be in the exact opposite position with LTE. By this time next year, T-Mobile will have completely reconfigured its network, moving a chunk of its HSPA+ network to PCS (which all versions of the iPhone support) and launching a new LTE network in AWS. Basically, T-Mobile’s networks will have nearly the same configuration as AT&T’s; any phone that can work with Ma Bell will be able to work with T-Mo.
The iPhone is definitely destined for T-Mobile. It’s just a question of timing. By the time the expected new iPhone emerges this fall, T-Mobile’s LTE network won’t be live, but it may have migrated a portion of its HSPA+ network over to PCS. If that’s the case, it could launch the new iPhone (as well as older versions) immediately and turn on the LTE radios as the new network goes up.
Of course, Apple has a say as to whether any of these operators gets its device. Apple’s tendency is to sell the iPhone through any operator willing to make a volume commitment. It also tends to stagger launches, giving such preferred partners as AT&T and Verizon first crack. By mid-2013, it’s a good bet we will see the iPhone offered by all four nationwide operators. It’s just a question of which networks those devices will access.
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