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Sprint can barely wait to rid itself of Nextel network

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Sprint CEO Dan Hesse

For the first time in six years, Sprint’s(s S) aging Nextel and wireline businesses didn’t overwhelm all positive gains from its primary CDMA business in its quarterly results. Sprint was helped along by 1.8 million iPhone activations, leading to big gains in revenue per subscriber and boosting its total wireless customers to a record 55 million. Still, Sprint is anxious to get rid of the Nextel albatross and spent a good of its fourth quarter financial earnings call detailing its plans to shut down the iDEN network.

Sprint plans to winnow down its total cell sites by 44 percent, from 68,000 towers to 38,000 over the next two years, said Steve Elfman, Sprint president of network operations and wholesale. In 2011, Sprint plans to decommission 9,600 towers by culling cell sites from many of its markets, maintaining its Nextel and Boost Mobile services while shutting down excess capacity. Sprint has started publishing maps on its website identifying which sites are targeted for the scrap heap.

Sprint is simultaneously building its new network architecture, called Network Vision, which will support its current CDMA network and future LTE network across its myriad of spectrum bands. Elfman said Sprint’s infrastructure vendors Ericsson(s Eric), Alcatel-Lucent(s alu) and Samsung have already begun work on all 38,000 Vision sites and plans to bring 12,000 of those towers online in 2012. The commercial LTE service will launch by mid-year in 10 markets. Sprint CEO Dan Hesse revealed two more of the 10 today, Kansas City and Baltimore, adding them to the previously announced Atlanta, Dallas, Houston and San Antonio.

The launch of Vision, combined with the shedding of the iDEN network burden, will fundamentally change Sprint’s cost structure for the better, Elfman said. He estimated that the operational and capital investment costs of delivering a gigabyte of data will drop by 50 percent. The cost of delivering a voice minute will also be halved, he said, though it wasn’t clear whether Elfman was talking about those savings coming from its CDMA 2G network or its future implementation of voice over LTE.

If Sprint can really halve its data delivery costs, it may be able to breath a second – or even a third – life into its unlimited data plans. Sprint is the only nationwide operator that hasn’t given in to the pressure of capping or throttling data, but enormous demand for mobile broadband services has to be threatening that strategy. The longer it can keep up with its customers’ unlimited use, the longer it can maintain its key competitive advantage against AT&T(s T) and Verizon Wireless(s vz)(s vod).

3 Responses to “Sprint can barely wait to rid itself of Nextel network”

  1. Virtuous

    What will stress Sprint’s network is the addition of so many new users, not the unlimited data plans. Gigaom continues to buy in to the myths created by the carriers.

    • Kevin Fitchard

      Sorry virtuous, I have to disagree no matter how much you think I’ve been brainwashed by the carriers.

      It’s a matter of physics and a matter of economics. Spectrum is a limited resource, which means there’s a limited amount of bandwidth. New technologies will push spectral efficiency, but we’re starting to bump up against a barrier called Shannon’s limit which will constrain any future bits/hertz increases in capacity. So what it comes down to is two intersecting lines based on average data consumption, when unlimited data prices fall below the cost of delivering that average consumption, then unlimited plans go bye bye. Either that or the operators start raising the price on unlimited plans.

      Operators still have some headroom today, and Sprint is milking that cost curve for all it’s worth. Good for it. But eventually the usage will catch up with costs.

      Obviously we disagree on this, but I’d rather be metered. Most people on unlimited plans would actually pay a lot less for data if they were on reasonable tiered per-GB plans (The stratified tiers out there today aren’t all that reasonable). Though there are heavy-volume users that get a deal out of unlimited data, most of us are just handing extra money to the operators.