4G Or Not 4G, That Is The Question

Sprint (S) is gambling nearly its entire future on a 4G WiMax network that it is installing around the country. The massive infrastructure project has the financial support of several large firms including Intel (INTC), which plan to profit from the new technology. Small 4G company Clearwire (CLWR) is providing much of the “science” behind the new product.

Sprint has bled customers while its larger competitors AT&T Wireless (T) and Verizon Wireless (VZ)(VOD) have been adding them. Sprint believes if its can set up a network with faster speeds for the transfer of data and entertainment content that it will siphon off subscribers from the other wireless companies.

Sprints still does not know how well 4G will work nationwide. AT&T has enough problems with its 3G network. Wireless systems are far from perfect.

AT&T recently played down the near-term value of 4G products. It and Verizon Wireless will use a different technology, Long Term Evolution, than Sprint.  According to The Wall Street Journal, “Consumers won’t be able to make much use of next-generation wireless networks for another two years according to AT&T management.” Verizon is viewed as having a lead over AT&T on LTE technology, but there will not be handsets to handle the new systems any time soon and building infrastructure will take years.

There is still an important set of issues about 4G and none of the wireless companies will be able to address them until there systems are in place: do most wireless users want faster online broadband? It will cost billions of dollars to build the infrastructure. What if the adoption rate by consumers is slow?

4G technology may revolutionize wireless communication, if anyone wants it.

Douglas A. McIntyre