Sprint's LTE launch falls one market short

Sprint Nextel (NYSE:S) announced the launch of LTE in five rather than six named markets next month, with the glaring omission of Baltimore casting a pall on the operator's long-awaited unveiling of next-generation technology.

Sprint CEO Dan Hesse specified a July 15 launch date for LTE service in Atlanta, Dallas, Houston, Kansas City and San Antonio. He did not disclose a reason for not launching Baltimore at the same time.

In January, while speaking at the Citi Global Entertainment, Media & Telecommunications Conference, Hesse said Sprint would launch LTE in 10 markets using 1900 MHz spectrum by mid-year, naming at that time Atlanta and the three Texas cities. In February, when releasing its fourth-quarter 2011 results, Sprint added Kansas City and Baltimore to its list of named LTE launch markets.

As for the total of 10 markets that Hesse promised earlier this year would be part of the initial LTE launch, Sprint spokeswoman Kathleen Dunleavy wrote in an email to FierceBroadbandWireless, "The original 10 you are referencing includes smaller surrounding markets to the big ones (i.e. in Atlanta, we also have Rome, Calhoun, Athens)."

She also indicated that pundits had misinterpreted Sprint's launch schedule. Dunleavy said the launch was always planned for mid-year, not "by mid-year," which some observers had taken to mean Sprint would launch LTE before the end of June.

Dunleavy did not provide a reason for Baltimore's omission from the list of markets launching on July 15, but she wrote, "Stay tuned for information about Baltimore very soon."

Stephane Teral, principal analyst for mobile infrastructure and carrier economics at Infonetics Research, suggested that, absent another explanation, the Baltimore delay could have to do with network engineering issues within Sprint.

Sprint announced this week that it is reclaiming some 240 network engineering jobs that it transferred to Ericsson (NASDAQ:ERIC) Operations three years ago under a network management contract. Sprint told the Kansas City Star that the return of the employees to its fold had nothing to do with its ongoing Network Vision project, which includes its LTE rollout. However, the newspaper reported that a client note from Jennifer Fritzsche of Wells Fargo Securities said Sprint now needs more "in-house network engineering expertise" due to the Network Vision project.

Another related reason for the Baltimore delay may be that the market is apparently getting an Alcatel-Lucent (NYSE:ALU) network rather than an Ericsson network.

In December 2010, Sprint announced infrastructure contracts for its $5 billion Network Vision project with Ericsson, Alcatel-Lucent and Samsung. At the time, Sprint noted that Ericsson's markets would include Atlanta, Dallas, Houston, Kansas City--all of which are part of the July 15 launch. Sprint said Alcatel-Lucent would be responsible for Baltimore, as well as New York City, Philadelphia, Boston, Washington, D.C. and the Los Angeles metro area, while Samsung was handed the Denver, Pittsburgh, San Francisco and Seattle markets.

Sprint's did not disclose the breadth of LTE coverage it is offering in each of the five launch cities. "While LTE coverage won't be ubiquitous at launch, it will fill in over time," said Dunleavy.

She confirmed that by year's end Sprint expects to have 12,000 cell sites outfitted with LTE. During the operator's fourth-quarter 2012 earnings call, Steve Elfman, Sprint's president of network operations and wholesale, said Network Vision will allow Sprint to reduce the total number of its cell sites by 44 percent, from 68,000 down to around 38,000.

Sprint said it expects have largely completed the build out of its high-speed LTE nationwide network by the end of 2013, when the network will cover some 250 million people.

The operator is still hustling to catch up with LTE market leaders Verizon Wireless (NYSE:VZ) and AT&T Mobility (NYSE:T). "Verizon is accounting for 80 percent of total worldwide LTE subscribers," said Teral.

In terms of spectrum, Sprint is deploying LTE in a 10 MHz block of 1900 MHz PCS spectrum. Verizon and AT&T are, for the most part, using 20 MHz blocks of 700 MHz spectrum for their networks, which will give them a speed advantage over Sprint in most markets.

Teral said that in the LTE race that Sprint at least has the edge over T-Mobile USA, which is still trying to fill its well-known spectrum gaps and only last month announced Ericsson and Nokia Siemens Networks as its network modernization vendors.

T-Mobile will initially deploy LTE in its AWS spectrum. In addition, although the operator is refarming spectrum to accommodate HSPA+ and LTE, T-Mobile will have to maintain some GSM capacity to serve international roamers, subtracting from the amount of spectrum the operator can dedicate to 3G and LTE services, Teral said.

But even if Sprint and T-Mobile successfully complete broad LTE build-outs, that may not secure their roles in the U.S. marketplace. "At the end of the day there is not that much differentiation between all of the players," said Teral.

But Teral said LTE matters because it brings spectral efficiencies, reducing the cost per bit. That's especially important for Sprint, which is still trying to differentiate itself by offering unlimited data for smartphones. "Arguably when you stick with unlimited data plans, if you have bandwidth hogs on your network, you'd better make sure that your network is in good shape to absorb those hogs," he said.

Sprint said its Network Vision project is also bringing improvements to its CDMA service. "Customers will experience better signal strength, fewer dropped/blocked calls, faster data speeds, expanded coverage and better overall performance as the improvements roll out across the country," said the operator.

Earlier this year Sprint announced that it had deployed its first multi-mode base station in Branchburg, N.J., and its first LTE network cluster in Kankakee, Ill., about 50 miles south of Chicago. Neither market has commercial LTE service from Sprint yet. Dunleavy said Kankakee "is not a regular test site for Sprint, but made sense for this effort because of the availability of sites ready for construction."

For more:
- see this Sprint release and video
- see this Kansas City Star article

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