On Friday, Dan Hesse, Sprint CEO, and his staff announced an aggressive rollout of LTE (Long Term Evolution). LTE is a fourth generation (4G) technology with capabilities built on 3GPP standard, which has links with other networks, including 2G and 3G. Sprint is calling their new plan the Network Vision deployment. During the two hour conference call Sprint made several announcements which we will cover in this article.
Network Vision Objectives – Where Sprint is going on?
Steve Elfman, Sprint’s president of network operations and wholesale, gave several assurances. He said the carrier’s first LTE markets will be turned on by mid-2012 and Sprint’s LTE build out will be largely complete by 2013. The LTE build out includes new dual-mode mobile devices. Sprint is prepared to spend ten billion dollars over the next two years deploying Network Vision and LTE as well as maintaining its legacy wireline and wireless operations.
Upgrading cell tower equipment at 22,000 sites nationwide.
Just over a year and a half ago, Sprint jumped into the 4G marketplace with their WiMAX (Worldwide Interoperability for Microwave Access known as IEEE 802.16) protocol network the first 4G system in North America. Sprint got into WiMAX by reselling the Clearwire licensed spectrum of 2.5-2.6 GHz to connect their WiMAX 4G wireless smartphones and USB modems. The industry has seen WiMAX rapidly slip into limbo and LTE move forward as the best choice.
Sprint now has problems with simultaneously running three different mobile networks. This is an expensive process which is part of the reason they have lost money for 15 consecutive quarters. At their cell sites, Sprint will replace refrigerator-sized cabinets for each of today’s technology (800 MHz, 1.9 GHz and 2.5 GHz) in favor of smaller, more energy efficient multi-mode base stations and multi-mode antenna that can tackle numerous wireless technologies.
Sprint promised 15 dual-mode CDMA/LTE devices in 2012.
The company says they’ll use their own 800 MHz spectrum, 1900MHz PCS G-Block where Sprint has a nationwide 5×5 MHz block of spectrum band, and LightSquared’s 1600MHz spectrum (pending FCC approval) for LTE FDD (frequency division duplexing). Sprint’s G-Block spectrum will be combined with other 1900 MHz spectrum for its LTE FDD service. The carrier currently has an average of 20-25 MHz per market nationwide in 1900 MHz spectrum.
Sprint and LightSquared entered into a 9-year $15 billion network hosting arrangement in July. LightSquared will use Sprint’s Network Vision architecture, but LightSquared is currently mired in concerns that its network will cause interference with GPS receivers The FCC has mandated more tests of its network. Sprint has the right to terminate its deal with LightSquared if the FCC does not grant approval by the end of 2011.
Sprint’s Network Vision spectrum plan.
Bob Azzi, Sprint’s senior vice president of networks, said that by the end of 2012, Sprint will cover 176 million POPs (point of presence) with 4G, a figure that includes 123 million LTE POPs, 120 million WiMAX POPs and 67 million POPs that will overlap. By the end of Sprint’s Network Vision deployment at the end of 2013, Sprint will have 250 million LTE POPs covered and will continue filling in smaller markets with LTE at the beginning of 2014.
Background on Sprint’s current networks
LTE Network POP – Sprint owns 800 and 1900MHz spectrums, hosts a 1600MHz and resales te WiMAX spectrum (that business is currently winding down)
Today, Sprint’s "core" network is a nationwide 1.9GHz, 3G CDMA/EVDO (Code Division Multiple Access/Evolution-Data Optimized) network. Throughput is in the 500Kbps to 900Kbps range, depending on your handset model and your locations.
Their old Nextel iDEN (Integrated Digital Enhanced Network) PTT (push-to-talk) service has a throughput of 20Kbps to 30Kbps. It is used mostly by the service and construction businesses. It’s similar to walkie-talkie communication used in military and emergency responder settings. During the past three years, Sprint Nextel moved their transmitter frequencies to different places in the 800Mhz radio spectrum. This freed up spectrum for Public Safety.
Next week, the Sprint Direct Connect, PTT network will start to move to CDMA network protocol. Sprint also plans to deploy CDMA 1X voice service in its 800 MHz spectrum and move CDMA traffic off its 1900 MHz spectrum. This will significantly increase throughput and reduce network congestion.
Sprint’s 4G WiMAX high-speed network partners with Clearwire to cover the nation. Clearwire has had financially bad several years slowing their expansion. Analysts were also perplexed that Sprint isn’t including Clearwire in its network revamp project because Sprint is a 54 percent owner of Clearwire.
This oversight started a spirited discussion with the financial analyst on Friday. They asked wouldn’t it be cheaper to buy Clearwire and rebuild their system with LTE technology, rather than spending $10 billion to build Sprint’s own LTE network? Sprint said they spend $1 billion a year in fees to Clearwire for WiMAX. Sprint executives? answers did not satisfy the financial analyst and you can bet similar questions will continue in the future as Network Vision comes online.
After the announcement on Friday, Clearwire’s stock dropped 32 percent to $1.39 and Sprint Nextel stock dropped nearly 20 percent to close at $2.41. Their respective highs for the past year were, $7.51 for Clearwire, and $6.45 for Sprint.
Clearwire and Sprint stock… as you can see, neither company had much luck
Part of the reason Sprint is stepping away from Clearwire is that Clearwire has chosen to install LTE TDD (time-division duplexing). TDD is used with IEEE 802.16 WiMAX radio switching protocol. Thus, Clearwire would not have to modify their radio signaling protocol.
Sprint is using LTE FDD because most cellular systems, including the UMTS/WCDMA Frequency Division Duplexing mode and the CDMA2000 system, already use it. Thus, Sprint will have a smoother transition between their LTE, CDMA EVDO, and 1X radio switching protocol devices. This will also lower the cost of manufacturing their dual-mode mobile devices.
Sprint says they will sell the (Clearwire) WiMAX devices through 2012. They also said they would support the WiMAX devices after 2012. This could be a way of leveraging Clearwire into selling off their 71 installed WiMAX locations.
By October 20, Verizon will have covered 164 markets in the country with its rapidly expanding LTE network. AT&T, meanwhile, has launched its next-generation LTE service in five cities ? Atlanta, Chicago, Dallas, Houston and San Antonio ? and plans to cover 70 million POPs in 15 markets by year-end. AT&T and T-mobile now sell an enhanced version of the HSPA+ mobile data service which they claim is "4G". All testing of the HSPA+ phones shows they are slower than LTE devices.
On Tuesday of last week, Sprint announced they will be offering Apple iPhones.
Sprint iPhone 4S offer
Apple’s iPhone was a constant theme throughout Friday’s conference call. CEO Hesse said Sprint’s churn (customers leaving for another carrier) is directly related to not having the Apple iPhone. He said the iPhone would over time "be one of our most profitable devices," but he did not elaborate. An iPhone that Sprint sells for $200 with a two-year contract is estimated to cost approximately $600 wholesale from Apple. Like AT&T and Verizon, Sprint has to count on making up the difference over time through data service fees. However, today’s iPhones can use neither Clearwire’s 4G WiMAX network nor Sprint’s upcoming LTE-FDD 4G network.
Sprint is number three with 51.9 million subscribers, compared to AT&T Wireless? 71.3 million, Verizon Wireless? 67.2 million, and T-Mobile?s 30.8 million. AT&T and T-Mobile use the HSPA+ protocol while Verizon LTE has taken over the mobile high speed leadership with their LTE network. Thus, Sprint has a lot of ground to make up in diverse product offerings. They must find new Apple iPhone users, create iPhone customer satisfaction with their Unlimited Data Plan, and secure financing of their Network Vision expansion. A tall order for a company and management team that has been losing money since 2006.