In the past 2 weeks we all are reading about Sprint. I have to tell you, it’s like a soap opera listening to these guys. Here is a company that appears to have real problems. They had an earnings call and the fact that they said “the sky is not falling” was such good news their stock went up. All this after a Re/Code blog post sent stocks downward, (American Tower, Crown Castle, and Sprint) by stating the plan of Sprint. The power of blogging when a blog post can send stocks spiraling down and make a mediocre earnings call look great.
So what am I talking about? Let’s review what was said on the call, what I hear from contractors and PMs, and all the articles out there. I include the articles so that you know I am not making this up.
First off, Sprint did gain subscribers and the churn is down. Good news, not great news, but it’s not bad but not as good as any of the competition and even past calls. I mean Sprint is offering ½ off anyone else’s contract price, but they expect to keep the people well after the contract is up. Good luck with that but if someone came to you because you’re cheap, do you think they will stay because they like you or do you think they will continue to be cheap? Let’s look at it this way, if Wal-Mart shoppers found a cheaper place to shop, would they continue to go to Wal-Mart? What do you think?
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Let’s talk more good news, Sprint is bragging about the fast network they have, article found here, where Nielson Mobile Performance states Sprint is faster than the other big carriers like T-Mobile, AT&T, and Verizon. How is this so? Crowd source data says so, that’s how. So this is Sprints LTE download speeds according to crowd source information.
Then, how will Sprint improve the network? They have a plan that will do several things. First off, the densification with small cells and mini-macro sites will grow the network.
What is a macro mini or a mini macro? This could be either a single cell eNodeB, meaning just one BTS on a pole, probably with an Omni antenna but they would point it towards the area where they need the coverage. There are 2 ways to handle this so let me cover them both. It could be something like Nokia has, they are making an all in one station which is more like a large small cell, pretty awesome! This is an all in one unit. Or, the likely way Sprint will probably go because they don’t want to buy anything new, take an eNodeB that they already have in stock or from a macro site. They would deploy a single eNodeB with the smaller BBU cabinet about 5 feet off the ground and the radio head would probably be on the top of the pole. Then the antenna with the desired coverage. I believe that Sprint will go this way so that they can use what they have in stock and equipment they can rip off of existing macro sites to deploy. It seems they would rather pay the installers and integrators rather than buy new equipment. The site should have batteries so they may have to install a battery cable, which would be heavy and sit on the ground with about 4 hours of backup.
What about backhaul? Sprint does admit that they are going to get creative with the backhaul of the small cells and mini-macro sites. I read an article, found here, about how Sprint plans to use anything for backhaul. This makes sense to be and here is why. Microwave is one option, and with the removal of Clearwire they should have a ton of Dragonwave gear lying around. They can still use microwave on these poles, although it’s more to install and if they pay normal rent that would cost more, it has very little maintenance cost compared to the monthly recurring OpEx you have with fiber. It would make sense in the long run but you can’t throw in anywhere. You need to have line of site or at least near line of site to connect the sites. Then you need to go to a site that has fiber backhaul. As you add more sites going back to the fiber site you need to add capacity back to the core. Mr. John Saw also mentioned the 2.5GHz UE Relay for backhaul. This is cheap and easy to install and the small cells may come with the UE Relay box already installed. This is cheap and easy to install but the sites they go to need to have the added capacity. The other drawback is growth. If the small cell gets loaded then the UE backhaul may limit the backhaul speeds. Also, you need to dedicate that valuable spectrum of 2.5GHz for backhaul. So while it’s pretty cheap up front, it has a huge downside in the long run using the 2.5GHz spectrum, but I get it, Sprint is doing this build as cheap as possible.
Did you really think I wouldn’t talk about the reallocation of sites from the towers to the poles? I read an article by Ken Schmidt, found here on LinkedIn, that helps to clarify that Sprint can’t move from the towers overnight. Instead, I see them doing the densification where they build out the poles for a lot less rent. How will they save money doing this? Well, if it was one to one it would make sense. But you have to figure that it takes about 30 small cells or mini macros to cover what one full-blown macro site would do. So leaving macro altogether would be like deploying a Wi-Fi only system with spot coverage, not a reliable mobile network. It will take a HetNet to become a reliable network. Now, they are using Mobilitie to roll out and this makes sense because they are doing all that they can to bypass the tower companies. They are also doing the best that they can to use Right-of-Way, RoW, to save money. Let me explain RoW, if you can have Right-of-Way access on a pole you can install it for very little rent annually, even lower than going on a pole with the utility which is much lower than going with a traditional tower site owner. RoW is not free, you need to apply for permits and install a new pole and run power and figure out backhaul and pay for the installation. Make sure the neighbors are happy! Neighbors include not only the residents and businesses nearby but the city or municipality that will need to live with this new pole. Make sure it runs quietly and look beautiful. Everyone is looking and the locals are listening. San Francisco did a good job explaining this here. They would also like to install in light poles because that would be where the people are at, in malls, strip malls, arenas, etc. To see more on this here is a good explanation.
Something to think about, to put in a mini macro you would probably want height to get above clutter, maybe over 80 feet high. The reality is that most cities and municipalities will not allow this due to pole height restrictions, especially in RoW locations. So that could be a major problem with the RF design.
What about the network support? Currently Ericsson Management Services (EMS) handles this. Their contract will be up some time this year. They already have the RFP out there for a replacement but it is not clear who will win. My bet is the lowest bidder. If Sprint goes with someone new there will be a transitional period and they may need to retain some of the Ericsson people that can help guide the transition to make it painless.
Did I mention that they are almost done with the layoff of 2,500 (mostly customer care) people? According to them this is 7% of the workforce, and then they plan to hire back 1,300 people, guessing about 4% of the workforce, mostly RF engineers and sales people. This will save money, lose the customer service people and gain some sales and engineering talent. I find this interesting but it’s a well needed shift ion talent. Sprints engineers are really overworked. I also think that Sprint knows that if the sales people don’t sell then they will be replaced quickly. They are saving money doing this.
I know that everyone is looking not only at Sprint but also at Softbank for what they are doing. Let’s face it, they are really running the show for the network expansion based on what they learned in Japan. Is this innovation or insanity? We will see, but I have to admit, it’s really shaking up the industry. We need to shake up the industry once in a while. I thought that the deceased LightSquared might do that but they just went away, so sad. Will there be innovation with FirstNet? Maybe if Rivada can build the network but if the carriers win the bid it will just be another expansion, no innovation.
I have been talking to some contractors and Sprint is still doing some 2.5GHz growth, it is not dead. Mobilitie is handling the densification project. They are learning along the way but they have some very qualified people. As long as they can focus and be willing to pivot then they should do fine. They have already started. The one thing they need to very aware of is the permitting and planning done by the cities will change as they do the build. Trust me, the larger cities are keeping a close eye on the deployment so that they can learn and adjust the rules quickly to avoid problems in their city. They have already learned from the ExtaNet and Crown Castle deployments. This could be something that Mobilitie should look at and learn from.
I wish Sprint the best of luck. They are really shaking up the industry. They gave me a lot to talk about. Thank you Sprint, we all have so much to write about and talk about!
Last thing, there was an article that there is still Huawei gear in the Sprint network. Let’s clarify, it’s on the Clearwire network. Sprint is trying to take down the Clearwire network but they can’t because there is a court order making them keep it up in some areas.
If you’re interested in why some see this as network suicide, read Iain Gillott’s article in RCR, found here, and he lays it out step by step.
Earnings call recorded here and transcript here.
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