Will Sprint Shine or Fade?

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I believe most of you see that Sprint has been an interesting story, but the real question is will they shine or fade. Sprint has made a lot of moves only to see their subscriber base shrink. They have done a so-so job marketing and their network has some ups but mostly remains the same. They have made it clear that they only want to grow if someone else pays for it and that they don’t want to spend any money if possible.

So what is Sprint’s next move? Well, there are several, let’s cover the ones that concern the company’s network.

What about the network? That’s what I am interested in. Sprint’s optimization effort really seems to be paying off. They have been making inroads by improving their Rootmetrics scores. For instance, in Austin they were #1 in download speed and tied for #1 in performance, reliability, and calls, per this article. That’s not all. They also got #1 in DC for call performance and network reliability. So Sprint is improving their network as they wind down their optimization effort this year. Now they should start growing their network. It seems like they have trouble doing both.

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So Sprint has handed over the densification project to Mobilitie, who has started growing the network. It appears that they already started with applications being filed in Salem City, Ma, found here. Mobilitie is taking on the task of building and financing the network for Sprint. What a deal for Sprint. I hope Mobilitie has good financing, which I am sure they do. So it appears that Sprint will finally move ahead growing their network. They are finding ways to do it without supporting any of the traditional players in the ecosystem.

How will they do this? Two things come to mind. Sprint announced that they plan to cut over $1B from the budget by running away from tower companies. They really want to get out of their leases with American Tower and Crown Castle, according to this article in ReCode, they intend to get out of those leases and find a cheaper way to do this. Well, let’s look at this, chances are good that they signed long-term leases with this guys so they will have to wait until the lease is up to make a cost effective move. I know that American Tower leases are tough and binding so Sprint would pay now or pay later, so why be in a hurry. Also, to move will cost money, so will they really move? Does that make sense? It would in the long haul of they can save enough money on the monthly recurring, the OpEx would really go down.  However, I think that Sprint is too savvy for that, I think they will let the densification happen on Mobilitie’s dime then start to decommission the macro sites where they can. For one thing, if you talk to anyone at Sprint you realize they have no money to spend except on hiring presidents. The infrastructure needs to limp along for a while longer. So I don’t see any reason for ATC or CC to worry about this immediately.

What else does ReCode bring up? The expensive and horrible contracts that Sprint is in for backhaul. They mention how Sprint is relying on AT&T and Verizon for fiber connections, most of which are probably antiquated anyway. According to the article they spend over $1Billion a year on this. Now, they plan to use microwave again, back to the future? Microwave was quite common but let’s look at this. They still need fiber at the sites to get it back to the core, right? Sprint also should look at expansion, will they pick a microwave vendor that can grow with them? It’s not necessarily the vendor’s limitations. They need to pay more to rent extra space on the tower to add the dishes, they need to make sure that the licensed spectrum is enough for 100Mbps or more of backhaul. Then, the site they are sending it to has to expand to support multiple sites instead of just one. All of this and there needs to be line of site for the link to work properly. Sure, you could go NLOS, near line of site or no line of site technology, but it may not give you the bandwidth you really want from a site. Their maintenance costs might be higher because if they have weather related issues it will mean more dispatches. It will still be cheaper than paying the monthly OpEx for fiber. They have to really think it through, but they have really smart engineers, I am sure that they are very confident that all the pieces will fall into place, right?

So, you may have asked about using in-band for backhaul. I know that this is a major thing with the small cells and mini macro sites because Sprint put it in their RFPs. This is something that Sprint has expressed an interest in using their licensed 2.5GHz spectrum for backhaul. They have plenty of it but will they do this today and stunt the growth for tomorrow? I find it interesting that a company whose CFO said that the chunks of 600MHz spectrum are not enough, article found here, would use the 2.5GHz spectrum for backhaul. It doesn’t make sense to me because he won’t participate in the 600MHz auction because it’s not enough spectrum. They decide not to get some spectrum, in these days of aggregation, and opt for no spectrum. No wonder John LeGere makes fun of these guys. Sprint has plenty of 2.5GHz spectrum to grow but they are slowly rolling it out. They also appear to keep the 3G network up and running for voice for some time while all the other carriers are moving to VoLTE to sunset 3G. On the bright side Sprint should be able to buy used 3G equipment to maintain their system for voice.

They need to be aligned. Marcello Claure has been hiring regional presidents. Very regional and specific, like Johan Chung for Northern California and Nevada, Jim Mills for Illinois and Wisconsin, Conrad Hunter for New England region, and Karen Paletta for New York and Philly Tri-State regions. For more go to their Newsroom site here. Will this pay off? How will they structure this? They have technical VPs that run each region so will these presidents run everything or just sales and marketing? Will they put all of the technical personnel under the same umbrella? I doubt it but I find it interesting to have a president of the South, Jaime Jones, and then a specific president of Georgia, Alabama, and Tennessee, Brian S Miller. That’s a lot of presidents. So if a customer wants to speak to the president, the Sprint rep can say, which one?

So, will Sprint survive or should they merge with T-Mobile? Maybe a cable company (Comcast) should take them over. It would make sense and they definitely need to grow but the heavy debt load that Sprint has really makes them an ugly target, what a shame. One thing I have learned over the past several months is that Sprint appears to be in trouble, financially. They appear to be bleeding subscribers but I think that’s because T-Mobile is growing their network and aggressively rolling out and their marketing campaign is changing the industry. Good for T-Mobile.

How did Sprint get here, I really don’t know, but if you call PNC Bank maybe they will connect you to Dan Hesse who sits on the board there now, maybe he has some answers.

It takes money and a good plan to run a network like this. It is not an easy thing. There are 3 carriers who appear to be doing it right and one who consistently struggles, why is that? I hope that Marcelo Claure and Softbank can turn Sprint around. It may be painful and maybe they can be disrupting enough to be a game changer. We’ll see.

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I really want Sprint to succeed and become healthy again, sooner than later, but they really need to start moving in a positive direction soon. Maybe they already are and I just don’t see it.

By the way, the carriers need to free the small cells! 

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