Sprint will use 2.5 GHz spectrum, dark fiber for backhaul to small cells

Sprint (NYSE:S) CTO John Saw said that the company is looking at ways to reduce backhaul costs by using its 2.5 GHz spectrum assets to provide wireless backhaul for small cells instead of fiber. In addition, Saw said the company will use dark fiber for backhaul, which may not be cheaper than traditional fiber but will allow the operator more control over the speed and capacity of the backhaul circuit.

sprint cto john saw


Last week Re/code reported that Sprint planned a "radical overhaul of its cellular network" by relocating its towers from space leased from Crown Castle and American Tower to government-owned land where rent is cheaper. In addition, Re/code said that Sprint planned to revamp its backhaul because the company currently pays approximately $1 billion to competitors AT&T (NYSE: T) and Verizon (NYSE: VZ) for use of their fiber backhaul.

During the company's call with investors today, Sprint executives tried to sooth nervous investors by providing additional clarity on their network plans. CEO Marcelo Claure said that the company is focused on a "densification and optimization" strategy that will not jeopardize the customer experience. In addition, he said that Sprint is looking at a lower cost structure that includes having towers "built to suit," and using monopoles and poll attachments for antennas instead of automatically using existing towers from companies such as American Tower and Crown Castle. However, Claure and Saw both emphasized that they are aware of the company's existing tower long-term tower leases and do not have plans to break those leases.

However, Saw said that as these leases expire the company will look at options for antennas beyond just renewing those existing tower leases. "As we densify and add more sites we will optimize the costs and look for lower cost infrastructure to attach antennas," he said.

Saw added that the company is currently conducting field tests for using its 2.5 GHz spectrum to backhaul its small cell traffic. Sprint has between 160 MHz and 194 MHz of 2.5 GHz spectrum in many of its markets. "I am confident that with a backhaul strategy of dark fiber and microwave radio and small cells being surgical and precise, we can have a very low cost and efficient backhaul plan," Saw said.

Interestingly, this isn't the first time Saw, the former CTO of Clearwire (which was acquired by Sprint in 2013), has trumpeted the use of microwave for backhaul. Clearwire's WiMAX network used microwave backhaul for 90 percent of its connections. Back in 2010, Saw told the attendees at the PCIA Wireless Infrastructure Show that Clearwire used a lattice pattern so that every cell site has two or three paths back to a data center. The result, according to Saw, was that the network was remarkably fast and could quickly turn on a new cell site. 

Following its acquisition of Clearwire, Sprint is now working to decommission the WiMAX network.

However, analysts are still skeptical about Saw's new plans for Sprint. Iain Gillott, founder of iGR Research, told FierceWireless that he doesn't think that microwave backhaul such as what Saw has proposed will scale, particularly if the company starts to see strong growth in traffic from new services such as mobile video. "Using microwave backhaul in 2.5 GHz won't go that far," Gillott said, noting that microwave backhaul is good for short distances in dense urban cities but not in much of the U.S. where population centers are not all clustered in urban corridors. "There's a reason you aren't seeing other operators like Verizon and AT&T deploying microwave backhaul."

Sprint later clarified the company's plans. Adrienne Norton, spokeswoman for Sprint, said in a statement that Sprint currently runs one of the largest microwave networks in the U.S. based on the microwave network it acquired from Clearwire.  She added that for small cells the company is looking at the potential of 2.5 GHz for in-band backhaul, which is not microwave backhaul.

But Saw isn't alone in championing dark fiber for backhaul. Competitive service providers such as Zayo have recently seen strong growth wireless carriers that want dark fiber for backhaul. Last year Zayo said it had completed the buildout of fiber to 800 tower sites. Part of Zayo's 800 sites includes a new agreement with an unnamed wireless carrier to provide FTTT service to 500 towers.

Interestingly, Sprint also announced that it, along with SoftBank and its partners, has established a network-related financing entity that could provide $3 billion to $5 billion in incremental funding in its fiscal 2016. Sprint said that this entity will raise proceeds from Sprint's existing radio access equipment as well as other assets associated with its network densification and a small portion of its spectrum portfolio. Sprint said it expects the first transaction to close by the middle of 2016.

When asked about this entity, Saw said that the company will retain ownership of that spectrum and will still be able to use the spectrum. Sprint executives added that the purpose of the new entity is to raise money to fund the deployment of the new network.

For more:
- see this press release
- see this webcast (reg. req.)

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Update: This story was updated on Jan. 28 to add a statement from Sprint regarding its current microwave backhaul network and its plans for using 2.5 GHz in-band backhaul for its small cells.