Sprint is the most ambitious of the four major U.S. cellular carriers, acquiring Nextel for $35 billion and making bets on emerging technologies like WiMax. But with costs up, customers unhappy, and layoffs imminent, the No. 3 U.S. cellular carrier may have taken on more than it can handle.
With 53 million subscribers, Sprint is in a race to build out its high-speed wireless networks. Last week it upgraded its Evolution Data Optimized network to offer more upstream capacity to enable services such as voice over IP and video telephony in Miami, Portland, Ore., and Puerto Rico. Sprint started the EV-DO upgrades in October and now has 24 U.S. locations completed. The upgraded network can compete with DSL, Sprint says, offering average download speeds of 600 Kbps to 1.4 Mbps and average upload speeds of 350 to 500 Kbps.
Sprint's not alone here; all the cellular carriers are boosting network performance. Verizon Wireless last week launched services in several U.S. metro areas based on an EV-DO upgrade similar to Sprint's. Cingular last year began upgrading its network to technology that promises connections of 400 to 700 Kbps and recently deployed the IP Multimedia Subsystem, which lets cellular, Wi-Fi, and wireline networks talk to one another, making services more seamless as users move around. T-Mobile is spending about $2.7 billion to upgrade its network to 3G by midyear.
Sprint is the first U.S. cellular carrier to build a wireless broadband network based on mobile WiMax. It plans to spend $1 billion this year and as much as $2 billion in 2008 on the network, promising services in some areas by the year's end. Last month, the company said Chicago and Washington, D.C., would be the first U.S. cities where the network will be deployed.
With such a major project in the works, other parts of Sprint's business have suffered. Demand is down for its integrated Digital Enhanced Network, or iDEN, which it inherited when it acquired Nextel in 2005, says CEO Gary Foresee. Sprint scored at the bottom of a Forrester Research customer-confidence study last year. That may explain why it lost a net 300,000 subscribers last quarter.
Maintaining two separate networks--Nextel's iDEN and Sprint's CDMA--has raised operational costs. Sprint last month projected flat revenue of around $41 billion this year. It plans to lay off 5,000 employees.
|Sprint's To-Do List|
|Upgrade EV-DO network|
|Start deploying WiMax this year|
|Add 4,800 cell sites to iDEN network|
|Roll out 10 phone models|
It also has rolled out combined CDMA-iDEN phones that can access both networks. And last week the company said it will use mFormation Technologies' mobile device management software to remotely manage subscriber cell phones.
Sprint spent $7 billion last year on improvements and has plans for improvements, including 4,800 new cell sites. That's the kind of focus the company needs: improving existing services first and rolling out next-generation services second.