Sprint is pulling back on plans to upgrade its network across the U.S. using its massive amount of 2.5 gigahertz spectrum, a move that will lower capital spending but raises strategic and marketing questions, analysts say. (WSJ)
Sprint unveiled new plans for new subscribers that upgrade to the Apple. iPhone for life and iPhone unlimited $50, which could be a reason it’s looking to both trim spending and to beef up its network in up to five markets.
Their strategy, is to scale back their 2.5 GHz deployment to just three to five cities, providing what they describe as a ‘Tokyo-like’ experience in those markets,” In the rest of the country, they plan to be positioned as ‘best value.’ You can see that with its $50 offering and its best deal in data plans. That marks a rather radical departure from Sprint’s and SoftBank’s previously stated strategy of building the ‘best network’ on a broad scale.
We’re guessing it was just to expensive for even Softbank to pull off.
And it presents a perhaps insurmountable, challenge for marketing. How can Sprint create a brand that stands for one thing in just a few markets (best network yada yada) and something else entirely (best value severely degraded) in the rest.”
On the stock front investors like the move.
Colby Synesael, a Cowen & Co., upgraded Sprint stock to outperform on Friday.
Sprint’s renewed focus is on removing costs, That means layoffs are coming and the company will be more surgical with its 2.5 GHz build-out than what had previously been expected by focusing on a handful of markets where it can demonstrate its differentiation, but also importantly will help limit spending.
Sprint’s decision to pursue a smaller 2.5 GHz deployment in just three to five key markets raises questions over its strategy and ability to offer unlimited data plans for smartphone users, as well as ever catching AT&T or Verizon.
Sprint’s new chief executive officer, Marcelo Claure, disclosed Sprint’s shift in plans when he met with Wall Street analysts on Thursday after presenting at a Goldman Sachs conference.
What are you thoughts on the move by Sprint?
I just spoke to my cousin that works at sprint as a tech. He told me sprint just laid off about about 150 techs and employees in the Las Vegas area. That’s a shit load of lay offs for one area such as Las Vegas… Looks like the corporate carrier store is becoming a thing of the past.
Ouch
Sprint is on track to cover 100 million POPs with 2.5GHz by the end of the year, and in the next phase of deployment it will focus on dense builds in key markets, but it still plans to deploy 2.5GHz nationwide. This article accurately explains: http://www.fiercewireless.com/story/sprint-tweaks-25-ghz-lte-deployment-strategy-target-congested-parts-network/2014-09-12
Actually that was the old policy under Dan Hesse and the new CEO made his stance quite clear and stated beyond those five cities spark was being shut down. Not our words. His words
tk, any idea which five cites they are focusing on?
NYC Boston Chicago Miami and LA.
They may also leave spark on in Dallas
Forgetting a player – Clear/Clearwire. SoftBank has a stake in them (as did Sprint). Clear provided Sprint’s 4G service.
Clear is not the best but it is futuristic – over the air service – plugin the modem for home and done. Similar idea is Straighttalk home home – take it withyou anywhere.
There is something in the works – SoftBank is too good at making money to eat a loss and not have a plan.
After reading his comments, it doesn’t sound as though they are actually shutting down the band 41 roll out nation wide, but are just refocusing. First on a handful of cities to show the true potential of the network, but also in areas where the network is overburdened. Why build out sites in the middle of nowhere when the band 25 and 26 spectrum is more than sufficient? This focused approach seems to make more sense than simply adding B41 to all 30,000+ sites.
Sprint doesn’t know what they really want to do. To rip and replace network infrastructure promising your customers (especially one’s who endured their crappy network) a better service on a nation wide scale and back track to only providing a few cities with their so called spark 4G LTE, it’s not a good look. Looks like T-Mobile will be taking their spot in short order.
TK,
I would like to bring some details to your attention.
First of all, you make it sound like Sprint is completely shutting down their Spark rollout nationwide aside from 5 cities. That is not the case.
First some background: I assume you know, but everyone may not. Sprint’s Spark rollout is currently being managed by 3 different OEMs. Samsung, Alcatel-Lucent, and Nokia. Each OEM has their own area of focus.
While it is true that Sprint will be re-focusing rollout, there are more than 5 cities on that list. Just for starters, Samsung’s focus cities for the first round of rollouts will be Cleveland, Detroit, Indianapolis, Chicago, Minneapolis, Denver, Seattle, Portland and San Francisco. That’s 9 cities right there. And that’s just Samsung. Alcatel-Lucent and Nokia each have their own lists, both with more than 5 cities on them.
Notice I said first round of rollouts. There will be more to come.
Additionally, Sprint will deploy spark equipment to sites outside of these focus cities on a case-by-case basis. If a site is overburdened, Spark equipment will be deployed to bring speeds back up to par.
Where Spark is already deployed, it will stay on. In your article it sounds like you are saying Sprint will turn it off. They aren’t going to do that.
So, while it’s not the immediate nationwide rollout that was somewhat expected, it will probably lead to a better managed rollout. It’s really along the same lines of T-Mobiles LTE rollout, target the dense urban areas first, then spread out from there.
Thanks, do you work at sprint? And did you see the CEO comments ?
Do I work at Sprint? No, but I do have a statement from a Samsung source stating that they are going to continue deploying in the 9 cities I listed earlier, and that the other OEMs have their own list. And – that deployment will continue across the board on congested sites on an as-needed basis.
I have seen Claure’s comments, and they are being misconstrued. Claure really needs to make another statement to clarify what he said, but it would seem some people are getting the wrong idea.
I appreciate what you “source” has said, But again im not misconstruing what the CEO said, I am taking what he said verbatim, Im not misconstruing anything here.
He said quote “5 CITIES”, Quote “Tokyo Experience”
He was asked a follow up question and the CEO confirmed that they would ONLY focus on those 5 cities, He said nothing else about the roll out and he did say they were changing direction and it was suspended.
NOT MY WORDS>……. These were his.
SO who am I to believe some person who works on the towers…. Or the CEO…. I think that answer is pretty easy.
THIS IS THE CEO’S words not mine.
Thanks
TK,
Apologize in advance for the rather long post.
I dug around for the transcript, and I think the quote below is what you are basing your article off of. If not, can you show me?
—
“What I think we are going to do different I think we are going to move to a smarter model in terms of how do we deploy our network? When I got there, the initial plan is let’s just deploy 2.5 across our 33 sites. What it means is it take you too long to be good anywhere. So we are changing our deployment plan that’s going to be really, really focused on 2.5. First we are going to focus in areas where our network is congested. There are parts, everybody’s network, Verizon, AT&T, T-Mobile network there are certain peak times that the network gets congested. But what we have that nobody else has is we have that rich spectrum on 2.5 that brings additional capacity. So, we are going to focus first and foremost to make sure that we are building 2.5 for our current 3G and 4G networks capacity. So that way you are going to enhance the experience.
And then secondly, we are going to go strong after a few cities rather than building out the 33,000 sites, we are going to first focus on getting the – getting a certain amount of cities, where we can provide customers our end to end experience. When you look at what the vision it was Spark is about we have the compelling advantage that identifies what is the – which spectrum, which band we are going to use to better serve you. So, now once we build 2.5 in some selected markets that we will be announcing soon, we are going to focus on those markets and provide an experience of the speeds that haven’t been deployed in the U.S. again before.
So, you are going to see us a really, really focused effort in terms of where do we deploy it and how do we use our capital and CapEx a lot more effective than we have had. There is no need to plaster the nation with 2.5, because it’s going to take us too long. So, we want to get some early wins by providing.”
—
If so, I believe it is putting words in Claure’s mouth to say that they are focused on only 5 cities. It is true that he is talking about a few cities, but I don’t believe he specified a number anywhere. I think it was a misstep to say “a few cities” when in reality the number is likely between 20 and 30. I think he needs to make that correction ASAP. But, in his quote you can also see that they are going to deploy Spark to sites that are over capacity, even if they aren’t part of the 20 or so focus cities. So for those that live in cities not on the list, it isn’t a total lost.
I will admit, it’s a little disappointing because I live in a city where this change means it’ll likely be another 6 to 12 months before we start to feel the effects of the Spark deployment. However, I also believe this will lead to a better managed rollout. Even if it means some cities are going to miss out for a few more months.
Actually that’s a much longer and earlier piece. What he said was just a few days ago to the WSJ and then again to the investors on a call. Also he said 5 cities only and a Tokyo experience. After that call sprint stock went up because scraping spark in other cities saved sprint A LOT of money I.E. More for investors
Here is the exact quotes from the call this was also reported on IBD
“Their strategy, in a nutshell, is to scale back their 2.5 GHz deployment to just three to five cities, providing what they describe as a ‘Tokyo-like’ experience in those markets,” “In the rest of the country, they plan to be positioned as ‘best value.’ That marks a rather radical departure from Sprint’s and SoftBank’s previously stated strategy of building the ‘best network’ on a broad scale.
“And it presents an obvious, and perhaps insurmountable, challenge for marketing. How can they create a brand that stands for one thing in just a few markets (best network) and something else entirely (best value) in the rest.”
Colby Synesael, a Cowen & Co., upgraded Sprint stock to outperform on Friday
“While we acknowledge that additional changes to its pricing plans could be (margin) dilutive, the absolute severity will likely be limited considering Sprint’s renewed focus on removing costs,” Synesael said in a research note. “The company will be more surgical with its 2.5 GHz build-out than we had previously expected by focusing on a handful of markets where it can demonstrate its differentiation, but also importantly will help limit capex spend.”
Japan’s SoftBank owns 80% of Sprint.
Sprint’s decision to pursue a targeted 2.5 GHz deployment in just three to five key markets raises questions over its strategy to offer unlimited data plans for smartphone users, as well as its goal of overtaking AT&T (NYSE:T), Verizon Communications (NYSE:VZ) and T-Mobile US (NYSE:TMUS) in 4G LTE (long-term evolution) data speeds, some analysts say.
Sprint’s new chief executive, Marcelo Claure, disclosed Sprint’s shift in plans when he met with Wall Street analysts on Thursday after presenting at a Goldman Sachs conference.
Ok, but at what point did he actually say 5 cities? I know what being reported, but I’m looking for an actual quote from Claure.
Everything that the equipment vendors are reporting would indicate that 20-30 cities are getting the “Tokyo” treatment in this first round. And that the focus will expand to other cities once they are done there. Plus strained capacity sites will also be upgraded regardless of location.
Google sprint investors call and listen to it. You can hear it for yourself. I heard it, IBD heard it, WSJ heard it