Sprint: Backhaul Solutions; Situation with MSO Consortium; Picocell Rollout

Implications: 1.Sprint has settled on using mixtures of four different solutions for backhaul purposes. 2.The MSOs are looking to get into WiMAX in a big way by themselves. 3.Sprint is scheduled to roll out picocell solutions this month.

Analysis:  

From an official product point of view for backhaul, Sprint has decided to go with a combination of offerings from FiberTower, Bright House Networks, Ceterus Networks – along with leasing capacity from the CATV companies. Whatever combination is cheapest in any given location will be the determining factor.

Despite the report that Sprint is out of the wireless spectrum-bidding consortium with several MSOs, backhaul capacity from CATV companies will still absolutely be a major consideration. (It should be noted that it appears that Sprint was actually let go by its partners and did not apparently quit on its own volition.) Sprint is still heading down the path of a two-tier architecture regarding the MSOs because it does not break even until 10 megabits worth of data is reached (the average cell site has four DS-1s or 6 megabits). So, the wireless carrier will still use ILEC access, but bring that traffic back into some intermediate hub – and then use a CATV 100-megabit pipe from there and haul everything back to the switch site.

The handwriting has been on the wall for a while with the MSOs planning on

heading down a path without Sprint. Actually, going towards WiMAX might make more sense for the CATV firms than with even Sprint. (Of course, all bets are off with the new 700-MHz spectrum.) While the old CDMA range at 1.9 GHz was at least designed for a five-to-seven mile radius, at 2.5 GHz, the thinking is to get the throughput for high-speed broadband connections, as small as a half a mile type radius might be in play. It is just going to take a huge number of towers. For MSOs, it is no big deal in that they have the cable plant infrastructure kind of everywhere and when one needs to have towers that often, they just stick them up on their poles or on the sides of homes. In effect, the cable TV companies would have the ability to put out the tens of thousands of towers that will be needed – potentially becoming part of their infrastructure. If low-to-medium speed voice is needed, the cable is used. If high speed is necessary, perhaps the wireless connections get employed. Moreover, it might not be kept mobile – maybe it just becomes a fixed wireless service for them.

Concerning Ceterus and its circuit-bonding platform, it probably did not hurt that its founder and CTO was formerly with Sprint and actually both companies have made joint contributions to the ITU. However, it is hard to understand why Sprint continues to look at the possibility of placing a little router at every 4G tower (using MLPPP bonding methods) instead of only relying on more cost-effective devices such as from Ceterus.

Sprint has also been scheduled to roll out a picocell offering to the first 5,000 subscribers in August. At one point, Sprint was looking at a price in the neighborhood of $100 per widget. It will allow a true extension of the CDMA network for people that need to stand on their porch in order to make a call. (The problem with building penetration has been exacerbated by the frequency ranges owned by Sprint.)