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Sprint will be deploying an LTE 4G network for the first time.  (Source: Wikimedia Commons)

Sprint has traditionally backed WiMAX, a rival 4G technology. The new deal puts the future of the company's WiMAX network in limbo.  (Source: Sprint)
Third party communications firm will provide Sprint with its LTE services

Sprint Nextel Corp. (S) was the first major U.S. carrier to try to deploy a 4G spec. network.  Sprint's WiMAX network launched in September. 2008 and has slowly picked up steam adding more cities.  Sprint has indicated, though, that it may consider switching to LTE -- the 4G standard that Verizon Wireless (VZ) currently supports and AT&T Inc.'s (T) promises to soon support.

Now it appears Sprint is preparing to take the plunge, entering into a $13.5B USD contract with LightSquared to deploy an LTE network.  LightSquared licenses and owns large chunks of the so-called "L-Band" (1-2 GHz) spectrum, and thus has room to grow its LTE offerings.

The network will open in some markets next year, and will be available to over "260 million Americans" by 2014.

Under the agreement LightSquared will give Sprint $9B USD in cash for the infrastructure deployment, as well as "purchase credits" for LTE and satellite service valued at $4.5B USD.

Under the convoluted deal, which ties the two companies closely together, Sprint may be able to purchase extra LTE services from LightSquared, using the network it was paid to deploy.  Other carriers may also purchase LightSquared services (perhaps AT&T or Verizon).

LightSquared, who sells service to a number of small operators, such as Cellular South, also entered into a contract for 3G nationwide roaming on Sprint's network.  This part of the deal should mean extra money for Sprint, and could prove a boon to local network subscribers traveling around the country.

Overall the deal seems like a smart one all around.  Cash-strapped Sprint gets a big payday and the chance to sell LTE phones like the HTC Thunderbolt by HTC Corp. (SEO:066570) for the first time.  And LightSquared gains valuable infrastructure to license to players big and small.

The biggest seeming potential downside is the quandary the deal leaves Sprint's WiMAX network.  Now that Sprint is officially going to be adopting LTE, customers may be hesitant to purchase WiMAX handsets like the HTC EVO 3D or the Epic 4G by Samsung Electronics Comp., Ltd. (SEO:005930) -- particularly when Sprint charges $10 USD extra per month for WiMAX data plans on those phones.  A big question going ahead is whether Sprint will continue to expand its WiMAX network, or focus its efforts solely on LTE, going forward.


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