Sprint (NYSE:S) CEO Dan Hesse acknowledged that the carrier is still working through its Network Vision network upgrade, and that as it replaces equipment to improve its network, customers will see degradations in service and Sprint will see higher churn as a result. However, he said that Sprint's tri-mode LTE service, dubbed "Sprint Spark," which is just getting underway, will provide the kind of speed differentiation that will set Sprint apart.
Of the weakening network quality for customers in markets where Sprint is ripping out and replacing equipment to improve voice and data performance, Hesse said that "personally, it's something that's painful to me," because of the strides that Sprint has made in recent years on improving customer satisfaction. However, he promised that brighter days are ahead, as Sprint rolls toward completing Network Vision in mid-2014 and broadens the availability of Spark.
"It's something that is worth waiting for, for our customers," he said of Spark, speaking at the UBS Global Media & Communications Conference.
Hesse said that by mid-2014, Sprint will be far enough along with Network Vision and the rollout of Sprint Spark that it can mount a national marketing campaign to tout its network.
Sprint has said its Spark service, which combines 800 MHz, 1.9 GHz and 2.5 GHz LTE transmissions, will come to the top 100 U.S. markets during the next three years, with speeds capable of reaching 50-60 Mbps and perhaps faster thanks to carrier aggregation.
However, that relies on Sprint deploying 60 MHz of spectrum for LTE as well as new base station radio heads, which is a process that will begin in earnest next year. Sprint Spark is currently rolling out in parts of Chicago, Los Angeles, New York, Miami and Tampa.
Hesse said that Spark is available in around 25 percent of those initial markets. "It will take a while to finish," he acknowledged. However, he said that the Spark service could continue to increase in speed in the future. He said Sprint could eventually use 60 MHz 2.5 GHz channels using carrier aggregation, since Sprint controls 120 MHz of 2.5 GHz spectrum in 90 of the top 100 U.S. markets. In two years, that could produce real-world speeds of 150-180 Mbps, Hesse said.
Sprint expects to cover 200 million POPs with LTE on its 1.9 GHz spectrum by the end of 2013, and will expand that to 250 million POPs by mid-2014.
The company has also started deploying LTE in its 800 MHz spectrum, which was freed up from the closure of its Nextel iDEN network. Hesse said that Sprint will have 150 million POPs covered with 800 MHz LTE by the end of 2014.
As for its 2.5 GHz spectrum, Sprint plans to have 5,000 2.5 GHz TD-LTE sites on air by year end, and expects to cover 100 million POPs with 2.5 GHz LTE by the end of 2014.
Sprint also announced its sixth smartphone capable of using the Spark service, the Samsung Galaxy S4, which Sprint is reissuing with tri-band capabilities.
As part of Network Vision, Sprint has also been rolling out HD Voice capabilities on its 800 MHz spectrum, and Hesse said roughly 8 million out of Sprint's 30 million postpaid customers have HD Voice-capable handsets, since Sprint has been seeding the market with them. By mid-2014, Hesse said the vast majority of Sprint's network footprint will have HD Voice, and he expects roughly half of postpaid base will have HD Voice-capable phones.
Mid-2014 appears to be a major inflection point for Sprint. Hesse said that by then, churn as a result of Network Vision will have peaked, and should improve thereafter. In the first half of 2014, Hesse Sprint may start marketing its network and Spark in select markets, before moving to a more national marketing message.
Hesse also reiterated that Sprint remains open to hosting another carriers' spectrum on its Network Vision multi-mode base station network architecture, if it works from an economic and business case perspective. Analysts have floated Dish Network (NASDAQ: DISH), Sprint's erstwhile suitor, as a possibility, since Dish controls more than 40 MHz of spectrum, but has not built out a network and has said it wants to partner with an existing wireless player.
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