Hesse: Sprint to subsidize WiMAX devices

You had to look hard through the Sprint earnings call info to find any information on WiMAX services being offered by the company, but we did find a few nuggets worth highlighting here. One that sort of jumped out of the transcript of the call (thanks, Seeking Alpha!) was Sprint CEO Dan Hesse’s pledge to subsidize hybrid 3G/4G devices, a marked departure from that of WiMAX partner Clearwire, which is adamant in its refusal to subsidize device costs. From the Sprint call Thursday, Hesse said:

Actually as we go into next year, when we expect to launch a number of multi-mode 3G/4G devices, which we think will be very hot, those will carry some significant subsidies as well. So I think it’s a trend that’s kind of with the industry to stay. But it’s not necessarily bad for the industry health, it just changes the economics in that the subsidy expenses will be higher.

Later on in the call, Hesse seemed optimistic that (like Clearwire), Sprint’s 4G sales would pick up toward the end of the year as bigger markets like Chicago and Dallas go live:

And also, very importantly, as I mentioned in my comments, it is too early for it to move the needle a lot but it’s going to give us momentum, we hope, into 2010 and that’s 4G. We have launched 17 markets but most of the POPs for 2009 will come near the end of the quarter, but that’s giving us some good lift in mobile broadband, in particular in those markets. And as we expand the device line up in 4G—dual-mode 4G/3G—it will really put us in a good position, going forward, kind of leaving 2009 and going into 2010. So we think 4G and dual-mode devices, as they come on board, will start to give us some lift going forward.

Hesse later noted that Sprint’s ability to resell WiMAX from Clearwire helps keep network capital expenditures (aka capex) off Sprint’s books (in case you forgot, that was one of the main reasons for Sprint to do the Clearwire merger):

The other thing I will say, is on for future in terms of capex, think of Clearwire, as well, as the next wave of capex requirements in the U.S., particularly on the post-paid side, is going to be building out 4G. And think of Clearwire as helping us almost cap, because we will still continue to improve coverage and increase capacity in our 3G network. But we can mitigate the amount of capital required for continued expansion of capacity in our 3G network with 4G. So as you are thinking about—it seemed like you thought our capex spending might be perhaps low going forward. A lot of that capex, the data capex, is being picked up on the Clearwire side.

About Paul Kapustka

Paul Kapustka is a longtime journalist who has spent more than two decades covering the information technology business, Paul most recently has been focusing on mobility and how it has changed the computing and collaborative landscape. His newest project outside Mobile Enterprise 360 is a research and analysis operation called WiFi Journal. He is also editor in chief of Mobile Sports Report, which covers the intersection of mobile technology and sports business. Paul is also the founder of Sidecut Reports, a research firm that covered the emergence of 4G technology in the cellular marketplace.