Stephen Bye, CTO and vice president of technology development at US operator Sprint Nextel, is relatively new to the firm, having been appointed in the first half of 2011. He was thrown straight in at the deep end—just weeks after he joined, Sprint launched its Network Vision project; an ambitious modernisation of its network portfolio, designed to address the technology fragmentation that was troubling the company. Network Vision includes a plan to consolidate Sprint’s iDEN and CDMA operations into one play, and to deploy LTE in an effort to increase efficiency, network coverage and data speeds for its customers.
Fortunately for Bye, Sprint outsourced a lot of the fire-fighting and day-to-day operations of its networks to Ericsson in a $5bn deal before he joined. Free from these constraints, he spends the majority of his time deciding how the operator will position itself from a technology strategy perspective. This involves formulating product roadmaps, making sure the operator is part of an ecosystem that allows it to achieve economies of scale and figuring out how to remain cost competitive as the firm continues to evolve, he says.
“I’d say my role is a little more beyond the day to day, and very much looking at the next one to five years and how that’s all looking,” he explains.
One of the major challenges facing Sprint is managing the costs associated with the Network Vision project. Bye explains that with everything the project entails, the operator will be seeing a sharp increase in capex over the next two years.
“The intent and objective is that, as we deploy LTE, we see the unit cost come down because we’re using a more spectrally efficient technology. It allows us to carry more bits per hertz, and allows us to support a lower unit cost,” he says.
“We’re well down the path in terms of the deployment activity for the Network Vision project, and we’re making very good progress with respect to that LTE deployment. In the last three or four months we’ve completed all of the integration testing and it has gone really well. The technology and the partners that we’re working with are delivering against all of the expectations that we put out there in terms of the performance, throughput, functionality and features.”
Despite competitors AT&T and Verizon planning to launch shared data pricing, allowing multiple devices owned by an individual or members of a family to draw data from a single monthly allotment, Sprint is committed to the retention of its unlimited data plans. Bye’s philosophy is that while the cost of provision is rising faster than the revenues being derived from data, unlimited data plans are simply more convenient for the consumer. He also argues that operators should not complain about growth, as it’s a good challenge to have.
“In most industries, people love to have growth, so I think it’s much better than the alternative. As an industry, having that as a problem is a great challenge to be focused on,” he says. “With the consumption of content and media, even if you look at wireline and cable providers, they’ve continued to enjoy that growth as technologies have become more sophisticated, screens get bigger, people move from SD to HD, and so on. I think we’re going to see the same happen for us and the company should get ahead of that curve. Those who do it more cost-effectively than the others will win, so that’s what we’re focused on.” Bye argues that providing convenience to the customer is the key to retaining them, and when operators start to price data based on usage, it creates a very complex situation for a customer. With unlimited data price plans, customers clearly do not have to worry about their data consumption. But if operators introduce usage-based price plans customers have a new set of problems to think about, says Bye, such as whether a software update is counted against their plan or the extent to which background applications are running and using up their data allowance without their knowledge.
Controversially, though, Bye suggests that unlimited data is not only easier for the user, it can also be more costeffective for the operator.
“A lot of operators are focused on the network cost but one needs to look at the overall end-to-end cost: what is the service related cost, how many calls are coming in to customer care teams? So we look at the end-toend business model and we continue to believe that unlimited is the best value proposition for our customers, it provides the best experience, and that’s something we continue to support,” he says.
That focus on convenience and customer experience extends to working with application developers, with Bye’s team looking to ensure that the apps running on their customers’ smartphones are performing efficiently. “When I look at applications, what concerns me most is whether the application has been well-written. By that I mean how is its performance on the device and what is the user experience using that application. We’ve certainly found that folks who are using a less disciplined approach to create applications create a bad experience on the device,” he says. “So when we see that, we go back to the developers and tell them to change these things. They still preserve the application itself but they create a better user experience in terms of the battery life and the performance on the device so it’s more efficient. We feel that that partnership is really important if we are to give the customer what they want. At the end of the day, our customers are paying for the usage of our service on devices that we provide.”
With a project on the scale of Network Vision, vendor selection is crucial to success. Sprint has opted for Samsung, Alcatel-Lucent and Ericsson for its network, and Bye explains that these three vendors were selected through after a lengthy process that sought to measure the value they will bring to the operator as well as the merits of their technologies. Ericsson’s existing position as managed services provider is especially important.
“We looked at their ability to support us, how flexible they were and how well they could meet our requirements. In terms of managed services, we went through a very long process, and Ericsson won on the opportunity they presented to us. When it comes down to relationships, it’s obviously important because they’re a strategic partner to us—but they had to win [the Network Vision deal] on their merits. Going forward, these relationships are really crucial for the day-to-day management of the project.”
While outsourcing is popular in many markets, Bye argues that Sprint has gone against the grain in the US, where more operators opt to keep network management in-house. Clearly he perceives Ericsson as the carrier’s core operational force for both its legacy equipment and the new network technology being deployed as part of Network Vision. “We’re probably a little different to most other North American operators in the extent to which we’ve outsourced, but I think it’s a more common model in other countries,” he explains.
Despite his reliance on Ericsson, Bye says he does not harbour any concerns over his technology roadmap. Recently there have been suggestions from certain quarters that some operators’ moves to outsourcing might have been hasty, motivated by short-term gains and incentives and not focused on the longer term strategic requirements of the operator. Bye says that he doesn’t characterise the operator’s decision to outsource as a relinquishing of control to Ericsson, “Ericsson is bringing the operational resources, tools and capabilities, but when it comes down to defining the performance and the SLAs—it’s a very tight relationship and tight cooperation between us and them. The way we look at them is that they’re an operational subcontractor to us; we manage them in the way we manage any other contractor that is doing work on our behalf.”
He adds that the key to maintaining a successful relationship is in being very deliberate and disciplined in where the firm draws boundaries between what the partners are doing, what is managed and where the signoff occurs.
“The vendor partnership management becomes a necessary core competence— you’ve got to be very clear about roles and responsibilities. I think if you build the right structure, you get the better outsourcing deal. But you also maintain the necessarily level of control that is required because, at the end of the day, we are the ones that are responsible for the customer experience and that is— front and centre for Sprint.”
One of the key elements of the Network Vision project is the re-farming of bandwidth that has hitherto been used for iDEN services—the Enhanced Specialised Mobile Radio (ESMR) 800MHz spectrum. From here on in, this will be used for CDMA2000 and LTE, after the Federal Communications Commission (FCC) approved new legislation surrounding use of the spectrum.
The FCC has amended its rules to allow licence holders “increased regulatory and technical flexibility”. Previously, the Commission’s rules imposed a restriction on the spectrum forcing ESMR licence holders to use narrowband technologies; services that use less than 25kHz of spectral bandwidth, such as iDEN. Sprint holds the majority of 800MHz ESMR licenses in the US and now that it has received approval from the FCC, Bye reveals that the operator has already begun the refarming process.
“We are in the process of taking down the iDEN network and migrating those customers over,” Bye says. “As we free up that spectrum we’ll be reusing it, shipping from iDEN to CDMA but also using LTE in that spectrum.” “It was a big decision to take down the iDEN network. It’s a considerable investment that we’re making, but it positions us very well competitively going forward as a company. If there’s one decision that has and will impact the trajectory of the company, it’s this one,” he adds.