American carrier Sprint has a widely recognized problem, which is that it needs to improve upon its network. It has outlined a plan to massively densify the network via its "Next Generation Network" plan, or NGN. Sprint has received approval from parent company, SoftBank, but in the last few weeks appears to have made no progress with the plans. We are now seeing impatient technology blogs covering the story and asking the question why Sprint hasn't announced plans and presumably started the rollout? Evercore ISI analysts Jonathan Schildkraut and Justin Ages wrote in a research note: "We believe that in order for [Sprint] to compete effectively with its competitors, its network quality needs to improve and we look to the NGN as the means for this improvement. However, despite the approval [Sprint] gained, our channel checks indicate no new capital has been put to work. We think the NGN is being revisited now that [Sprint] has an idea of the large operating expenses." The NGN plan was first announced in May and in early June, the company announced the approval from SoftBank - but the business has been quiet over the last five weeks. It now seems likely that Sprint will discuss the network plans at the company's next earnings call, likely due in the next month.
Some of the issues that Sprint face include the task of cleaning up the legacy LTE network left behind from former network chief, Steve Elfman; the Ericsson-driven Network Vision failed to deliver on the competitive LTE performance that was originally promised. The old equipment may not be compatible with the new network and so could need to be removed before the new network can be installed. BITG analyst Walter Piecyk wrote: "we can only assume Sprint is in ongoing negotiations with vendors to determine relative roles in the new network. We are unaware of any vendor decisions that have been made." Walter added that he was unsure the network announcement could be tagged onto an earnings announcement and that perhaps it would need its own day.
However, despite the analyst's negative opinion of the lack of immediate action from Sprint regarding their network plans, it's important to remember that Sprint have considerable network spectrum at the 2.5 GHz point. The carrier's average spectrum is 120 MHz in ninety of the top one hundred US markets. These reserves of spectrum should allow the carrier to build a wireless network with the potential for high wireless data speeds, but Sprint have so far been unable to utilise this asset. One of the disadvantages of the 2.5 GHz spectrum is that it will likely require a larger number of smaller cells building and these would require connecting to Sprint's main network via either a network of fiber backhaul cabling or a wireless solution. Walter has estimated that switching to a wireless backhaul technology across the 50,000 to 100,000 extra small sites that Sprint would need to implement for a truly dense network deployment, switching to a wireless backhaul technology could save between $600 million to $1.2 billion a year of network expense. Wireless backhaul would also improve how quickly Sprint could roll out their new network. As for the deployment of the small sites, it is believed that Nokia will be a main subcontractor for the work, especially given Sprint's commitment not to use Huawei technology for security reasons.
Sprint will roll out their new high density network in due course, but it seems that investment professionals are overly eager to criticize Sprint for seemingly taking no action when it must be remembered that network deployments need to be carefully staged and planned. It has only been a few weeks since Sprint announced the plans.