Thursday, October 6, 2011

Sprint Ties its Future to Network Vision

Sprint is moving full speed ahead on Network Vision. Sprint's strategic plan calls for an initial LTE service launch in its wholly-owned 1,900 MHz spectrum by mid-2012, a migration of iDEN subscribers onto the CDMA and LTE network, and a re-farming of the 800 MHz iDEN spectrum for LTE during 2013. Significantly, Sprint is moving away from Clearwire and its 4G WiMAX network, which boasts the deepest nationwide spectrum holdings. Clearwire, however, has announced intentions to adopt TDD-LTE (time division duplex LTE) -- a technology that offers asymmetric use of unpaired spectrum but which is incompatible with FDD-LTE (frequency division duplex LTE). At the same time, Sprint's Network Vision aims to provide the host infrastructure for other operators, notably Lightsquared and its proposed wholesale satellite + LTE service. Network Vision calls for the rebuilding of 22,000 base stations across the country over the next two years.

Here are highlights from Sprint's Network Vision webcast on October 7.

  • Sprint currently has over 52 million mobile subscribers and believes it has turned the corner and is again on the ascendancy in key subscriber metrics.

  • Sprint claims it has sufficient spectrum for the LTE rollout in the near term (1,900 MHz) and the mid-term (800 MHz). In the long term, Sprint will evaluate market opportunities for additional spectrum.

  • Network Vision has a targeted construction completion date of late 2013.

  • Sprint has already made "considerable" progress in Network Vision deployment. This includes 3G/4G lab testing, field testing and first field integration; the completion of detailed deployment plans with it three vendor partners (Alcatel-Lucent, Ericsson, Samsung); the completion of tower agreements; and plans for initial devices.

  • A key operating principle of Network Vision is that multimode equipment allows every tower to support all frequencies. This enables Sprint to be the host for other operators, for instance, LightSquared. For Sprint's 3G customers, Network Vision promises better signal strength, faster data speeds, better in-building performance, expanded coverage. It also reflects Sprint's long-term commitment to its CDMA network. For 4G, Sprint expects Network Vision will deliver LTE speeds exceeding its current WiMAX offering.

  • Spectrum hosting provides flexibility and potentially cheaper access to roaming.

  • The key equipment vendors for Network Vision are Alcatel-Lucent, Ericsson and Samsung. This selection had been previously announced. The contracts are divided regionally: Alcatel-Lucent will deliver equipment for the eastern seaboard, southern California, parts of Nevada and Arizona; Ericsson is the supplier for the southern states including Texas and Florida; and Samsung is the supplier for the mid-west and north western states.

  • Network Vision will deliver considerable energy savings.

  • Ericsson Managed Services will provide deployment support and will operate the network after acceptance.

  • Push-to-talk on CDMA launched earlier this month and Sprint reports iDEN-like performance. The CDMA network provides 3X the coverage. Network Vision will push it further and deliver better in-building penetration.

  • Sprint will offer a PTT DirectConnect app for Android devices.

  • Network Vision add $2.5 billion of incremental CAPEX over previous spending plan.

  • Network Vision investment is now $10 billion over two years. The CAPEX budget shifts $7 billion in planned CDMA costs and $4 billion in planned iDEN costs. Sprint said its CAPEX budget as a percentage of overall revenue is in-line with major competitors.

  • Sprint said it chose FDD LTE because of the widespread acceptance by other operators and the vibrant ecosystem of LTE chipset vendors and device manufacturers.

  • Migration away from iDEN is expected to accelerate. The planned closure of the iDEN network is forecast for mid-2013. As iDen customers are migrated off the iDEN network, the 800 MHz spectrum will be repurposed for LTE.

  • In Q4 2008, Sprint announced plans to retain iDEN network and its Clearwire investment closed.

  • Sprint will continue to deliver WiMAX devices. Many customers will not know whether they are WiMAX or LTE.

  • CDMA/WiMAX devices will continue to be sold through 2012.

  • Sprint's first dual mode CDMA / LTE products will be on the market by mid -20102.

  • Multimode CDMA/WiMAX/LTE will only be launched in mobile hotspots.

  • As for Clearwire, Sprint has a network agreement in place through 2012. After that, who knows? Sprint noted that Clearwire has separately announced its intention to migrate from WiMAX to TDD LTE -- implying that the companies will have incompatible network technologies going forward. Discussions on future opportunities are still proceeding. The current agreement calls for Sprint to pay Clearwire a minimum of $1 billion during 2011 and 2012 for WiMAX wholesale services.

  • Under its recently announced agreement with LightSquared, Sprint has already received $290 million to date. LightSquared is currently awaiting approval from the FCC for permission to proceed with an initial 20 MHZ of its 1.6 GHZ. If LightSquared does not obtain this approval by year-end 2001, there is a right to terminate the deal.

The webcast is archived on the Investor Relations page of the Sprint website.

  • This summer, Sprint and Crown Castle announced a new agreement to enable the delivery of the next-generation networks through Sprint’s Network Vision plan. Sprint announced a separate agreement with Mobilitie, a tower leasing company.

  • In July, Sprint and LightSquared announced a 15-year agreement that includes spectrum hosting and network services, 4G wholesale, and 3G roaming. The deal gives Sprint $9 billion in cash to build out its 4G network and provides LightSquared with a Tier-One partner for bringing its wholesale-only, nationwide LTE + L-Band broadband satellite service to market, should the FCC approve its GPS terrestrial interference mitigation proposals. Specifically, LightSquared will pay Sprint to deploy and operate a nationwide LTE network that hosts L-Band spectrum licensed to or available to LightSquared. As a wholesale-only carrier with separate core network operations, LightSquared can sell its 4G broadband capacity produced through this spectrum hosting relationship to Sprint, other wireless carriers, and retail partners.

  • Sprint is the largest shareholder in Clearwire with a 51% stake.

  • In November 2008, Clearwire and Sprint Nextel combined their next-generation wireless Internet businesses. Sprint contributed all of its 2.5 GHz spectrum and its WiMAX-related assets, including its XOHM business, to Clearwire. The implied equity valuation of Sprint's contribution was approximately $7.4 billion. In addition to spectrum, Sprint contributed to the new Clearwire certain hardware, software and all of its WiMAX-based trademarks and other WiMAX-related intellectual property. In addition, Clearwire received a $3.2 billion cash investment from Comcast, Intel, Time Warner Cable, Google and Bright House Networks. The transaction with Sprint and the new cash investment were completed on the terms originally announced on May 7, 2008.

See also