It seems like every cell phone operator will eventually migrate to LTE 4G technology. Even Sprint, which has invested plenty in its WiMax 4G partnership with Clearwire, could take the LTE route eventually. MetroPCS, an unlikely candidate, has taken the lead in LTE and will likely deploy services before America’s largest cell phone provider, Verizon Wireless. Leap Wireless seems to be a bit behind, but by most accounts they don’t mind. As RCR’s Dan Meyer explains, they’re taking a cautious approach to LTE, laying the groundwork now for an expansive roll-out in the future. Part of the reason is Cricket’s 3G broadband plans, a feature that MetroPCS lacks. Cricket has 600,000 broadband subscribers and is generally happy with its service. “We like where we are on 3G,” said CEO Doug Hutcheson.
Yet something else could be at play here. Rumors of a MetroPCS-Leap merger surface about once a month, and we once again saw an article regarding that in a recent edition of The Wall Street Journal. Anupreeta Das goes in depth, noting the issues that have held up the merger in the past. While bankers and analysts think the companies are a perfect fit, the two sides beg to differ. They can’t hammer out issues regarding the valuation of Leap, and specifically its 3G broadband assets.
Does MetroPCS’s aggressive LTE strategy, combined with the ever-present possibility of a merger, affect Leap’s own LTE plans? It’s impossible to say for sure. You won’t get anyone in either company to answer. Hutcheson did make a number of strong points, including infrastructure costs, as to why Leap is proceeding slowly with LTE. It also struck most people as strange that MetroPCS was pursuing the technology before other carriers like T-Mobile and AT&T, so perhaps they’re the odd ones here.
In any case, this is all to say that 1) Leap seems to have an idea o
f what it wants to do in terms of cellular networks, 2) that those plans still center on 3G EVDO, which it has done a good job with, and 3) that while the merger doesn’t seem likely, at least in the near future, talks can change at any moment. If something breaks the impasse we could see something move. Other than valuation of assets, there don’t seem to be many barriers between the two companies. That just happens to be a rather large barrier.
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