Sprint outsources network to Ericsson

This was originally posted at ZDNet's Between the Lines.

Sprint Nextel will outsource its network to Ericsson in a seven-year deal valued at $4.5 billion to $5 billion.

The deal, announced Thursday, allows Sprint to offload the costs associated with running its network. Sprint will transfer 6,000 employees to Ericsson.

Ericsson will now handle all the day-to-day operations and maintenance. The transfer of the network and the employees that go with them is set to happen by the end of the third quarter.

Steve Elfman, Sprint's president of network operations and wholesale, said on a conference call that Sprint still owns its network and is responsible for strategic plans and investments. Elfman added that the goal is to improve the quality of the network and deploy next-generation technologies. Sprint will keep its customer service operations.

Sprint didn't disclose exact numbers on savings. Elfman said Sprint expects to cut cost per labor unit. Sprint will also avoid investment in the tools that Ericsson already has. Economies of scale will enable Sprint-Ericsson to cut costs on software licenses and other expenses. Those savings will be invested in expanding network coverage.

Among other key parts of the deal:

• Sprint chooses technology platforms and vendors.

• Ericsson maintains Sprint's wireless and wireline networks.

• Ericsson will optimize Sprint's inventory of network assets.

• Ericsson and Sprint will focus on improving processes.

• No layoffs are anticipated due to the deal and Ericsson will set up shop in Overland, Kan., Sprint's headquarters.

[imkain]

This sounds like a good business strategy for Sprint and will assist them in obtaining new clients and push out new/advanced services.

[Renegade Knight]

Getting rid of your assetts is never good in the long run. There is no logic in "we can't make this work for ourselves, but someone else can" It just means that someone else should be running your business, or you need to get your crap together.

[ivorycruncher]

To me, it sounds like yet another reason to stay away from Sprint. Seems like every time I turn around, I hear how Sprint is announcing a new market strategy, yet their service remains poor, especially in rural areas. Now I've heard rumors that the Palm Pre is coming to Verizon, which is easy to do, since Verizon and Sprint use the same CDMA technology. If that happens, Sprint won't even have a killer device to support them.

[monkeyfun14]

Have you used sprint recently? They have changed quite a bit recently.

[cb3431]

Sprint has not improved on any level. I used them for two months this year and then switched to Verizon. I didn't pay anything to get out of the contract because Sprint knows their service is horrible and their network can be compared to a string and two tin cans.

[Kornbeef]

I don't know why Sprint is always bashed, I have had their service for two years and I have traveled all over the US. Of my friends and family who use ATT and Verizon, I usually have the most bars, have never had a dropped call, and can hear crystal clear. Now maybe I'm not hitting the right dead zones. The only problem I have with them is I'm still using the same 2 year old phone because I can't find one worth upgrading too...

[globalist_agenda]

So basically Sprint, and American company, is outsourcing thousands of jobs to Ericson, a Swedish company. Besides further contributing to U.S. unempoloyment, it raises the question if whether foreigners should have control of U.S. telecommunications assets. Doesn't this make it really easy for Ericson to spy on Americans? I think this is a national defense issue. If Sprint doesn't have their act together then the FCC should give management of the network to another U.S. company.

[tech_crazy]

What unemployment are you talking about? Did you read the entire article? Here's the last line of it
"? No layoffs are anticipated due to the deal and Ericsson will set up shop in Overland, Kan., Sprint's headquarters."

About the spying, you should be more scared about the American government using American companies to lawless spy on Americans. Do you not remember the CALEA and FISA abuses by the great Bush regime?

[jtdad]

This is an interesting development for Sprint. I have worked in the industry for many years, including several of those years with Sprint, and yes even employees know they have a terrible network. Most within the industry knew that it was just a matter of time until Sprint was aquired ever since their poor decision when they decided to buy Nextel. I mean the decision to buy a company that has a completly incompatible technology on a completely incompatible frequency where you are not even able to roam between the two entities on your own network was just one of the biggest blunders ever made within the wireless industry. Now their new decision to go to their own version of 4G, when the rest of the industry, including those overseas are going in a diffrent direction that is compatible so you can have world wide roaming is insane. Sprint is going in its own direction to try and push to get their 4G network out first, but they will make themselves into a virtual wireless island since once gain they will not collect roamers from other networks and their customers will not be able to roam on anyone elses spells suicide to me.
But this just looks like the final nail in Sprints coffin. If they are having Ericsson run their network because they were unable to be profitable at it themselves, and you know Ericsson is not going to do it without making a profit!!!! I would expect that Sprint will have a name change in the next few years, and the complete move will be made to 100% Ericsson control will follow soon after.

[sharmajunior]

well said. I agree with you on this one.

[libertyforall1776]

Interesting, this sounds like what AT&T needs to do!! AT&T is too slow to do everything it seems.

[williamjgreene]

What this outsourcing deal indicates to me is that Sprint is either too incompetent or too lazy to manage their own business but rather spend more time on the course and let someone else do it.

Folks you can't get something for nothing.

Ericsson is in this agreement for one reason - to make money. They don't give a damn about Sprint or their network. I certainly hope Sprint has enough sense to realize that they will receive no incremental improve from Ericsson. It will be strictly status quo at the very best.

I guess it's not all that surprising being they couldn't find anyone that was interested in purchasing their network in the first place. If it's not a rag now, it soon will be.

[jtdad]

Well, that is the point AT&T, Verizion, T-Mobile, and US Cellular along with the European and Asian Cellular companies are all moving to the same new 4G technology, except Sprint. It is not even planned for roll out until late this year by Verizion, but more likely next year since the system still isn't working corectly yet. However, as it stands right now, At&t does have the fastest network, infact its older 2.5G network runs as fast Verizions, T-Mobles, US Cellulars, and Sprints 3G. At&t is the only one running WCDMA (UMTS) for its 3G and they currently have the capability of opening up their pipe and running their speeds at more than 14Meg on the downloads. The problem is, the handsets. The current handsets with the exception of the IPhone can only handle about 214K on the download. So when I see the term "IPhone Killer" I laugh, because, until they all roll out 4G, or if it is not on At&t, it is not even close.

[ninetreasures]

Sprint is one of the leaders in dependability over the 3G networks, read the newest articles on cell phone 3G services. Not to mention At&t is one of the worst recently rated. I can tell you I switched from Verizon a month ago to Sprint and haven't looked back, Sprint is phenomenal. I'm on my pre right now using the internet. Sprint saves you money and comes with free roaming on most plans so you can basically roam off Verizon towers all you want (If you want to feel better about having a more expensive plan carriers tower). Sprint can have access to any verizon tower in order to complete a call seeing that Sprint and Verizon are the only two cell companies that use CDMA Cell Towers. Most Sprint phones you can even set manually to roam only so you would only use Verizon Towers AKA Verizon cell reception bars. I would highly recommend to look closely at Sprint before throwing your money away paying 50+ dollars more for the same thing. We aren't in the Ice ages Technology is technology its all works the same. Basically your getting Verizon for a cheaper Price...

[JEEPOFFROADV8]

i agree 100%

As one of the 8000 laid off this year, and after over eleven years at Sprint as a field technician, I can honestly say that I think that the Sprint network is the most reliable in the industry. I had Sprint phones for my self and family for all of those years, and I can count the number of dropped calls due to poor coverage on one hand. The two biggest problems that exist in Sprint today are the Nextel legacy that we unfortunately bought, and the poor management above the local levels. I'm hoping that at least the management issues get fixed with the outsource, so that my friends that still work there don't get screwed over. There are a lot of former Nextel managers trying to run things at Sprint the way they did at Nextel, and that obviously didn't work out so well for them. Instead of looking out for the best interest of the network, and thereby the customers, they look out for their friends. If I was legacy Nextel, I'd still be employed, but with this deal happening, I think I'm better off looking for something new.

[neoffyte]

I've been with Sprint for 9 yrs. They bought Nextel to get its government and business accounts. Over the years, I've kept an eye on the other carriers. Sprint has always surpassed them with their plans and reliable network. I save at least $20/month whereas buying a cellphone is a one-time transaction. They were simply too slow to release new equipment. Every carrier has dropped calls because there are too many factors that can't be controlled in order to provide us with PERFECT service - so deal with it! But I've stood in the middle of the desert, deep inside of buildings and several floors underground and have had the only working cellphone. I live in a very heavily congested metropolitan area and frequently travel to rural areas. Sprint has been very reliable. Where it hasn't worked - no other carrier was working either.

I applaud Sprint for being the only company, to date, that has cut a deal that retains its employees and keeps its HQ in the US. That means Ericson will have to move some of its assets into the US and keep them here. This arrangement will also solve its problem of releasing new equipment. Stop stomping on a company that is making a genuine effort to survive in the US and instead, turn your acid attention to those who either sailed overseas or closed its doors.

[lostnoz79]

As a former Iden tech I can say that I feel very sorry for my friends still working for Sprint. Things have gone so far down since Sprint came in and screwed up our whole network. To all those pumping up sprint...lets get real...that?s one company that cares only about upper management not the little guys or the customer. Maybe Ericson can turn things around but don't hold your breath. Free iden give us back NASCAR and let us make the money we were before the idiots came to town.

[JEEPOFFROADV8]

i love all these verizon fanboys!! you take pride in your greedy company based on there (most reliable network) so you pay higher monthly fees, have to deal with phones that are software locked. not to mention the worst phones in the telecommuncations industry. there customer service isnt good, i know i had them for 3 years! with sprint you get there service which is very good, plus you get to roam off other cdma providers not just for voice but for data to. there phones are top notch for example look at vzw"s ptt phone the adventure 750, it is the most flimsy military spec phone i have ever seen. compared to sprints qchat moto renegade v950. the difference in quality is unmistakeable! the v950 is 10 times the better phone! sorry but i would take sprint over vzw any day of the week!!!!

[lombardy121684]

after all's been said, bottom line is... there are always two sides in an argument... and with regard to this deal, it is still on its infancy...and it is too early to decide....we all then have something to look up to in this "wireless" industry where we are engaged with..