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Qualcomm, SoftBank, Sprint Develop 5G in 2.5 GHz Band; Rollout Expected in 2019

May 11, 2017 —

Working with Qualcomm Technologies and SoftBank, Sprint is developing 5G technologies in the 2.5 GHz band, including the 3GPP New Radio (NR) standard.

“Today 2.5 GHz TDD-LTE is one of the largest global wireless ecosystems used by some of the most influential operators in the world such as SoftBank and all of China’s operators, including China Mobile,” John Saw, Sprint CTO, wrote in a blog today.

The agreement includes developing a 3GPP 5G New Radio (NR) on the 2.5 GHz spectrum, which Sprint expects to deploy in late 2019.

“As one of the first proponents of 2.5 GHz and TDD-LTE for 4G, we understand the value of building a strong global ecosystem early on. This is why we are working with Qualcomm and SoftBank to develop the 3GPP 5G NR capabilities for 2.5 GHz,” Saw wrote.

Sprint has more than 160 MHz of 2.5 GHz spectrum in the top 100 U.S. markets, more mobile-ready 5G spectrum than any other U.S. carrier.

“Today we’re using this advantage to densify our network with more cell sites and antennas to build a strong foundation for 5G,” Saw wrote. “We are ensuring that Sprint’s deep 2.5 GHz spectrum is an early first-mover in the 5G ecosystem. Not all spectrum bands have this kind of global support and economy of scale.”

Last December, Sprint announced that it had developed technology that will increase 2.5 GHz network coverage by up to 30 percent to nearly match 1.9 GHz spectrum performance, while penetrating buildings at a rate of be 90 percent of what is achieved at 1.9 GHz spectrum.

The carrier demonstrated the advanced technology, known as High Performance User Equipment (HPUE), which a new power class – Power Class 2 – for end-user devices such as smartphones. In development for two years, HPUE was designed to improve the performance of TDD-LTE Band 41 networks, John Saw, wrote in a blog.

“In 2015, we began working on a solution to improve our 2.5 GHz coverage by increasing the uplink coverage of Band 41 devices,” Saw wrote.

Sprint said that its network is ready for the initial rollout of HPUE in its 250 LTE Plus markets. Samsung, one of Sprint’s most important ecosystem partners, is expected to support HPUE in devices slated for commercial launch sometime this year.

Sprint’s Wireless CapEx – What Gives?

By John Celentano

rp_Celentano-2-300x300-1-1.jpgSprint reported some positive improvements in its top-line performance in its fiscal year 2Q16 earnings call on October 25.

Postpaid net additions grew by 347,000, a 54-percent increase from 62,000 added in FY2Q15. These adds bring the total postpaid subscriber base to 25.7 million, up 1 percent on a year-to-year (YtY) basis. At the same time, customer retention programs are working; postpaid churn came in at 1.37 percent, down from 1.49 percent in FY2Q15. Postpaid average revenue per user (ARPU) keeps sliding, however, to $50.54, down 2 percent from $53.99 in FY2Q15.

Price competition with the other Tier 1 carriers has taken a toll on the top line, however. The net effect is that postpaid service revenues at $4.7 billion were flat to down 1 percent from $4.9 billion a year ago.

In turn, Sprint’s ability to fund its network expansion plans is hampered as it curtails capital expenditures (capex) to conserve cash.

Certainly, the company is reiterating a strategic program to optimize and densify its network. This program involves:

  • leveraging its extensive spectrum holdings, particularly in 2.5 GHz, and using 1.9 GHz for mid-band LTE services;
  • rolling out small cells, while utilizing innovative site structures across its infrastructure;
  • achieving capacity gains through carrier aggregation;
  • and maximizing network performance, even as it closely manages its capex deployment.

It is this latter point that raises some serious concerns as to how Sprint will achieve its network expansion goals and drive new revenues.

s-capex-summary-2016Sprint’s quarterly wireless capital spending has been in a nosedive for the past six quarters, declining at a compounded rate of 26 percent per quarter. From a peak of $1.6 billion in FY1Q15 (calendar 2Q15), Sprint’s wireless spending dropped steadily throughout the year to $577 million in FY4Q15. Wireless capex for the year totaled $4.1 billion, down 16 percent from$4.9 billion in the prior year.

The capital spending slide continued in the current fiscal year. FY1Q16 wireless capex came in at $376 million and dropped further to $358 million in FY2Q16.

It is important to note that capital efficiency (that is, the ratio of capex-to-service revenues) for these periods hit only 6 percent. That is barely in maintenance mode. When networks are expanding, carrier capital efficiency historically is at 15 percent or more. Even with capital cost saving measures, we would expect Sprint’s wireless capital efficiency ratio to be in low double digits, just to be able to meet its plan.

The big question is how much the company will invest through the balance of its current fiscal year.

In its October 25 earnings call, Sprint offered full-year FY2016 guidance for cash capex of “less than $3 billion, excluding devices leased through indirect channels.“

If we drop out the portions for wireline network and corporate capital expenditures, we estimate that Sprint has budgeted around $2.7 billion in wireless capex for FY2016.

Through mid-year, Sprint spent $734 million or just 27 percent of the budgeted total.

If it sticks to its plan, this means that Sprint must spend the nearly $2 billion balance on its wireless network upgrade and expansion over the next two quarters.

Can Sprint do it? How will it do it?


John Celentano is a technology marketing consultant and a wireless infrastructure expert.

Tier 1 Wireless Carrier CapEx: Steady As She Goes!

John Celentano

Principal
Skyline Marketing Group

rp_Celentano-2-300x300.jpg

Celentano

Tier 1 wireless carriers’ 2Q16 financial results showed aggregate capital expenditures (capex) growing 11 percent sequentially from 1Q16 but at lower levels, down 14 percent, compared to spending in 2Q15.

The good news is that the Tier 1s maintained their guidance for full-year capex. AT&T was the outlier suggesting its 2016e capex is trending towards the “low end of the range” without specifying a number.

The Tier 1s, collectively, are planning network investments totaling $26.9 billion in 2016e. That figure is down 11 percent from the $30.2 billion these national carriers spent in 2015. The Tier 1 carriers account for an Slide1estimated 96 percent to the total public wireless carrier capex in the United States.

Yet capital spending remains heavily concentrated. Verizon leads the pack with $11 billion or 41 percent of the Tier 1s’ total. Followed by AT&T at 31 percent of the total.

The lion’s share of the investment, more than 60 percent, is applied to radio access network (RAN) infrastructure – macrocells, small cells and DAS. All carriers still are spending on macrocell upgrades and expansions to 4G LTE coverage and capacity in multiple frequency bands. Network densification is accelerating, however, with a shift in spending toward indoor and outdoor small cells, and in-building DAS deployments.

Slide2The Tier 1s spent $12.9 billion or 48 percent of their aggregate 2016e budget through mid-year. The $6.8 billion in 2Q16 was up 11 percent sequentially from $6.1 billion in 1Q16 but down 14 percent compared to $7.9 billion in 2Q15.

Capex among Tier 1s should ramp steadily through the balance of the year, even at reduced levels from 2015. We expect 3Q16 spending to stay flat with 2Q, then uptick by 8 percent to $7.2 billion in 4Q16 as the Tier 1s round out their full-year budgets.

The lower but steady spending is little conciliation for wireless equipment vendors and professional service providers for the current year, at least. Nonetheless, accelerated infrastructure spending through year-end, mainly to meet unrelenting mobile data demand, bodes well for continued network expansion into 2017 and beyond.


John Celentano is a principal in Skyline Marketing Group, which provides technology marketing & sales strategy advisory in advanced communications services, and wireless, telecom, data networking infrastructure markets.  Additionally, support is provided for internal positions in market analysis, business development, strategic planning, strategic marketing, product management, product marketing, sales operations.

For more information, go to https://www.linkedin.com/in/john-celentano-4822692

AT&T, Sprint Mark 5G Milestones

By J. Sharpe Smith

Senior Editor
AGL eDigest

With the race to 5G officially on, two U.S. carriers, AT&T and Sprint, this week proudly announced their first achievements in this new frontier of wireless connectivity. Verizon Wireless is field testing at 28 GHz, but has not reported results, and T-Mobile plans trials in the second half of 2016 in the 28 GHz band, as well.

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Pearson

“Each of these trials is looking at better understanding the new techniques and possibilities of 5G and learning from them,” said Chris Pearson, president, 5G Americas. “All the major nationwide carriers have laid out their plans for 5G testing, each being a little different.”

AT&T reached speeds above 10 gigabits per second in early 5G tests with Ericsson, and it is now working with Nokia to expand its 5G lab trial work into system and software architecture in Middletown, New Jersey, Atlanta and San Ramon, California.

“We’ve seen great results in our 5G lab trials,” said Tom Keathley, senior vice president – wireless network architecture and design, AT&T. “Nokia is joining to help us test millimeter wave, which we expect to play a key role in 5G development and deployment.” The OEM is supplying test equipment for a variety of 5G technology building blocks and features.

In addition to reaching multi-gigabit speeds, the carrier’s initial 5G lab trials also simulate
real-world environment conditions, such as data spikes similar to a concert or football game.

Sprint Gets its Kicks with 5G

The other major announcement this week was Sprint’s demonstration of 5G at the 2016 Copa América Centenario tournament in Santa Clara, California.

The system used 73 GHz millimeter wavelength spectrum to deliver peak download speeds of more than 2 Gbps, which the soccer fans used to stream 4K high-def video and to view live streaming virtual reality from VideoStitch with low-millisecond latency.

Additionally, the system used beam switching, a method of tracking the device, selecting the best antennas, and sending their signals to targeted locations.

Can the 3GPP Standards Process Keep Up?

In the past it has been pretty easy for OEMs to develop their own proprietary technology, creating an alphabet soup past of acronyms. But it appears that the unity found in LTE continues to be the rule.

“All of the carriers are looking to contributed to the standards process what they learn,” Pearson. “As long as we don’t get ahead of ourselves and promise things to customers before the ecosystem is built, the tests and trials are very much a help to the carriers as they provide input to our association and the 3GPP standards process.”

AT&T said it is structuring its 5G trials to contribute to the international 5G standards development so it easily become compliant commercial deployments once standards are set by 3GPP.

“The work coming out of AT&T Labs will pave the way toward future international 5G standards and allow us to deliver these fast 5G speeds and network performance,” Heathley said. “We expect 3GPP will likely complete the first phase of standards-setting process in 2018.”

On the other side of the water, Belgium is getting on board with 5G as the country’s telecom minister has authorized their Institute for Postal Services and Telecommunications to find spectrum that could be temporarily allocated to mobile operators and research centers looking to carry out 5G trials. According to reports, the regulator is currently working with Ericsson to analyze the most suitable bands for 5G technology.

“There are a lot of tests and trials being performed around the world, including Europe and the Asia/Pacific region. A lot of governments are working closely with these carriers. But I think the North American region is in fine shape in terms of 5G development and the timing of the technology trials,” Pearson said.

Sprint Denies Industry Network Rumors

By J. Sharpe Smith

January 26, 2016  —  After a chaotic week of speculation in the press and on Wall Street, Sprint announced that it is executing on the same small cell densification plan that it had laid out previously. The announcement was meant as a response to an article in Re/Code that predicted Sprint would embark on a “radical overhaul” of its network, removing equipment from space leased on towers owned by American Tower and Crown Castle International.

“This is NOT a rip and replace strategy,” Marcelo Claure, Sprint CEO, told today’s 3Q, 2015, earnings call. “We continue to be focused on network performance as well as efficiency of capital and opex with the cost of building these costs materially less than macro sites in the past.”

Claure added that he is confident the company’s densification and optimization strategy will position the carrier for network parity or superiority within two years.

Sprint is deploying small cells using crowd source data, which allows a surgical approach to relieving customer pain points. Claure emphasized the importance to Sprint that any network changes do not harm the customer experience.

“The best part is this is it will be a progressive build whereby the customer experience will only improve incrementally with no disruptions in the service from existing sites,” he said.

Claure said Sprint’s best ever network performance is the result increased LTE deployment, spectrum, two-channel (2×20 megahertz) carrier aggregation in the 2.5 GHz band and antenna beamforming, which allows for create wider channels, more capacity and faster speeds.

“We are proud about how far the network has come and are excited to take it to new levels as we continue focus on densifying our network,” he said.

Sprint Will Seek Lowest Cost Solutions for Network Enhancement 

Not to say that money isn’t an issue for Sprint. CFO John Saw said the carrier is looking at all the options to find the lowest prices for sites, whether it is an existing macro tower, a build to suit, a roof top or a pole attachment.

“We are going to be very opportunistic to lower costs,” he said. “There are opportunities to reduce our costs in backhaul, leveraging a hybrid approach of fiber and wireless. We are also testing 2.5 GHz spectrum for backhauling small cells, which we think will be more cost-efficient than trenching fiber.”

Sprint also plans to lower its roaming costs by over-building in high-roaming areas and working with partner carriers through the Competitive Carrier Association to expand its LTE footprint in rural areas.