As part of a network overhaul dubbed “Next Generation Network” by Sprint insiders, the company hopes to also overhaul its business in an effort to end six years of financial losses. Reports from sources familiar with the effort indicate Sprint hopes to save $1 billion per year through a combination of moves directly tied to the performance of the network. These moves include the relocation of radio antennas to new towers and cutting ties to the AT&T and Verizon “backhaul.”
The relocation of radio antennas is expected to commence this coming summer. Sprint is preparing to transition leases of cell tower leases to a Newport Beach company, Mobilitie, that will focus on locating towers and infrastructure on government-owned rights of way. These are expected to be much cheaper than towers located on space rented from private landlords. Currently Sprint uses a combination tower leases managed by two companies, American Tower and Crown Capital.
The other part of the cost-cutting measure involves reduced dependency on AT&T and Verizon fiber-optic cables. This infrastructure is what connects cell towers with mobile switches and the rest of the telecommunications network and is referred to as the “backhaul.” Currently Sprint pays around $1 billion annually to AT&T and Verizon for access to the backhaul facilities.
In place of the current infrastructure, Sprint plans to make use of microwave technology. Sprint acquired Clearwire back in 2012, a company that used similar microwave technology, so it appears Sprint may have finally figured out a way to make use of that investment.
The changes will not be without significant risk to Sprint. In the past, network upgrades by Sprint drove customers away as outages and other problems negatively impacted performance. One insider with Sprint claims this new move will produce similar problems and “is going to be a nightmare.” The change may also force Sprint to reduce its footprint, abandoning some regions where the customer base is not large enough to support the investment.
Sprint’s CEO Marcelo Claure pledged to improve Sprint’s market position to either first or second place in 80 percent of the top 100 markets within two years time. If Sprint is able to deploy a larger number of smaller antennas, especially in urban locations, they may be able to improve capacity and achieve some success.
The move to reduce antenna and backhaul related costs is part of a larger effort to trim $2 billion from annual operating costs. Sprint is expected to layoff a large number of employees before the end of the month, possibly on January 22nd according to some sources. The carrier also announced they would not participate in an upcoming wireless spectrum auction.
Sprint has not issued an official statement regarding changes to its cellular network or infrastructure facilities.