The U.S.'s third-largest carrier Sprint is searching for more spectrum-grabbing deals as consumers continue to demand more from their data services.
Sprint's CEO Dan Hesse said he is looking to acquire more spectrum for the firm as rival companies Verizon Wireless and AT&T continue to claim what has quickly become the mobile industry's hottest commodity, according to Bloomberg.
As mobile technology and the popularity of smartphones and tablets continue to grow, more and more people are using their gadgets to access the Internet, stream media and view images -- which all adds up to a data-hungry consumer market. In order to keep up and remain competitive when customers expect these kinds of services as standard, carriers have to offer both competitive rates and have the capacity to accomodate ever-increasing data demand, which has caused firms to scrabble for additional spectrum resources.
As Craig Wigginton, head of telecommunications strategy at Deloitte & Touche LLP in New York told the publication, spectrum availability is now "a core competitive weapon in a mini arms race" within the mobile industry.
In order to try and secure additional spectrum, Sprint is now looking at potential deals with other firms and also through participating in government sales, such as the additional auctions the Federal Communications Commission (FCC) is planning to introduce.
Across the pond in the U.K., Ofcom announced this week that Everything Everywhere (EE) spent the most in snagging 4G spectrum after over 50 rounds of bidding. However, the agency was faced with disappointment after only raising £2.4 billion pounds, far less than the £3.5 billion figure Ofcom was expecting.
If Hesse wants to try and compete with American rivals, then the recent deal with Japanese carrier Softbank to acquire a large stake in Sprint may help him achieve his goals. In October, Softbank purchased 70 percent of the carrier for $20.1 billion, which will translate as a much-needed cash injection of $8 billion for Sprint, pending regulatory approval. These additional funds can be used in order to try and gather additional spectrum, something Sprint is already pursuing.
If the Softbank-Sprint deal is finalized, then the investment will allow Sprint to purchase additional shares in Clearwire, which will give the firm not only extra spectrum, but increase its customer base to 96 million users in the U.S. and Japan. However, it's not all plain sailing, as now majority shareholder Softbank has capped the carrier's bid at $2.97 a share -- against rival Dish Network which has offered $3.30 a share -- and so Sprint's CEO has to keep the company's options open.
"Clearwire would give us a strong spectrum position for a period of time,” Hesse told Bloomberg. "But we also have a very long-term view, and we would want to acquire more spectrum."
The potential Sprint-Clearwire deal would help the carrier stand firm against its competitors, but it will not necessarily be enough to cater for additional, data-hungry consumers in the future. The carrier could consider buying additional capacity from smaller competitors in the mobile marketplace -- such as U.S. Cellular or Leap Wireless -- or perhaps it may even consider talks with Dish Networks, who plans to sell excess spectrum if its attempts to create its own, branded wireless network falls apart.
Either way, if the U.S. carrier is going to compete effectively in the future, it must be able to take an aggressive stance in acquiring spectrum now, rather than try and make up lost ground later.
"Given the increases in data usage we are seeing, we will continue to be interested in spectrum as it comes to market,” Hesse noted. "It could be more deals like spectrum from other companies like we did with U.S. Cellular or it could be FCC auctions."