After months of speculation, Sprint Nextel (NYSE:S) has selected Alcatel-Lucent (NASDAQ:ALU), Ericsson (NASDAQ:ERIC) and Samsung for its network modernization project. The project will cost $4 billion to $5 billion, and is expected to take three to five years to complete.
|Sprint Nextel plans to switch to a
new multi-mode base station as part
of its network modernization plan.
Speculation had been building for months over which vendor or vendors Sprint would name for the project. According to a November report in the Wall Street Journal, Sprint excluded Chinese vendors Huawei and ZTE from the bidding process because of mounting national security concerns. That same article named Alcatel-Lucent and Samsung as the two finalists for the project.
The carrier divided the contract between the three vendors on a geographical basis. Alcatel-Lucent will be responsible for the upgrade in New York City, Philadelphia, Boston, Washington, D.C./Baltimore and Los Angeles; Ericsson will handle the project in Atlanta, Miami, Houston, Kansas City and Dallas; and Samsung will manage the upgrade in Chicago, Denver, Pittsburgh, San Francisco and Seattle.
Sprint said that work on the project will begin next year and designed to accomplish several goals. Sprint plans to improve the quality and in-building penetration of its 1900 MHz CDMA network and maximize its spectrum holdings in the 800 MHz, 1900 MHz and 2.5 GHz bands. By improving the coverage of its CDMA network, Sprint argues it can reduce roaming costs since customers will not be roaming onto competitors' networks as much. The company also plans to migrate iDEN customers to CDMA and offer new push-to-talk services on its CDMA network beginning in 2011. The company plans to use 800 MHz spectrum for voice and eventually take advantage of 1X Advanced technology.
Sprint also will be able to deploy LTE quickly if it chooses to by adding a baseband card to its base stations and then applying software update for LTE, Bob Azzi, Sprint's senior vice president of networks, told FierceWireless. During a conference call with analysts to discuss the plan, Steve Elfman, Sprint's president of network operations and wholesale, said that Clearwire's (NASDAQ:CLWR) mobile WiMAX network remains Sprint's 4G strategy, but also said the project represents an opportunity for the two companies to more closely share network infrastructure.
The company estimates that the total costs savings from the project over a seven-year period will be $10 billion to $11 billion. Sprint said the savings will come from capital efficiencies, reducing energy costs, lowering roaming expenses, backhaul savings and the eventual reduction in total cell sites. As part of the project, Sprint expects to cut the number of cell sites it operates by 20,000, down to a little below 45,000 total, Elfman said.
Elfman said that roughly 35 percent to 40 percent of the total financial benefits Sprint will receive will come from the phasing out of iDEN cell sites. Sprint has been losing iDEN subscribers for years and Elfman said that there is already some 800 MHz iDEN spectrum that can be used for CDMA services.
Sprint is 70 percent to 80 percent done rebanding the 800 MHz spectrum, Azzi told FierceWireless, and plans on consolidating iDEN channels into a 14 MHz spectrum block. The spectrum will become more efficient, he said, and Sprint will continue to provide service for iDEn subscribers while transitioning push-to-talk services to its CDMA network.
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