Verizon (NYSE:VZ), during its last earnings announcement, talked about progress of its 4G LTE network expansion in the U.S. LTE stands for Long Term Evolution and is a next generation mobile network technology that will offer higher speeds compared to 3G networks. When Verizon launched LTE initially in Dec 2010, it launched the service in about 38 markets which covered 110 million PoPs (points of presence).  Since then it has expanded rapidly and expects to cover 185 million PoPs in 175 markets in the U.S. by end of 2011.  This definitely gives Verizon some early market entry advantage compared to AT&T (NYSE:T) and challenges Sprint’s (NYSE:S) WiMax hope.
Verizon Catching Up, Sprint Should Think
Sprint has so far been the earliest entrant in the 4G wireless market with Clearwire’s (NASDAQ:CLWR) WiMax, which is another mobile network technology aimed to provide higher data speeds compared to 3G. We note that due to funding issues, Clearwire’s expansion has not been as brisk as we would have expected last year. The company reached about 125 million PoPs by end of March 2011, and it seems the the further expansion will be challenged by lack of adequate funds.  Even the recent deal with Sprint for a fee of $1 billion only partially addresses Clearwire’s needs. 
What does this mean?
It looks like Verizon has caught up with Sprint in terms of 4G expansion and is likely to zoom further ahead in the coming months. Therefore, Sprint’s advantage of being early to the market is now challenged, and the spotlight will be on how management responds. LTE is generally considered superior to WiMax and so if a gulf in 4G coverage widens between Verizon and Sprint, this will cast further doubt on Sprint’s 4G strategy.
- Verizon’s Q1 2011 Earnings Transcript, SeekingAlpha
- Clearwire’s SEC Filings
- Sprint Agrees to Pay Clearwire $1 Billion for Use of Network, Bloomberg, Apr 20 2011