Sprint Nextel's (NYSE:S) upgrade of its backhaul network from T1s to Ethernet will create such better efficiency for the company that it will reduce the cost of delivering data, even as consumer demand for data skyrockets. In fact, making the switch to Ethernet backhaul will give Sprint 20 times the bandwidth capacity at a cell site location, said a Sprint executive.
Speaking at the Pacific Crest Global Technology Leadership conference earlier this week in Vail, Colo., Sprint Nextel's Vice President of Strategic ProgramsMarty Nevshemal said that one of the goals of the company's Network Vision network modernization plan is to lower the cost of delivering data. As an example, Nevshemal said that the company might pay $1,500 per month for T1 backhaul at a tower site. That T1 might deliver 4.5 MB of backhaul capacity. When Sprint switches to Ethernet, Nevshemal said that for the same price of $1,500 per month, Sprint will get almost 20 times the backhaul bandwidth at that location. "Your unit cost for that part of the network--the backhaul--is 95 percent cheaper to put a bit of data through that backhaul. That is Network Vision," he said.
When asked whether Sprint can continue to offer its $79 per month unlimited data package, Nevshemal said that it's hard for the company to predict whether it will be able to offer unlimited data to customers indefinitely because it depends on how much data consumers will use--U.S. operators have seen data usage skyrocket as consumers rapidly upgrade to smartphones and those smartphones become more sophisticated in their capabilities. Sprint made headlines last month when an executive said that the company expects to offer unlimited data service for Apple's (NASDAQ:AAPL) LTE-compatible iPhone 5 when it comes out this fall--that is, if the rumored iPhone 5 actually launches and if Sprint gets it.
Interestingly, Nevshemal also said that the company will likely accelerate its launch of LTE markets in the fourth quarter. He said the carrier will have around 25 markets equipped with LTE by year-end. In mid-July, Sprint launched LTE in Atlanta, Dallas, Houston, Kansas City and San Antonio. He said that Sprint will begin notifying customers of the impending LTE launch in a market about 30 days in advance of the service being commercially available.
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