Sprint's rumored network overhaul to include relocating towers and relying on microwave backhaul

Sprint (NYSE:S) is reportedly about to embark on a radical overhaul of its cellular network that will include moving its antennas off of towers owned by companies like Crown Castle and American Tower and instead using government-owned land and towers with cheaper rent.

In addition, the carrier is rumored to also be ending its reliance on fiber for backhaul and instead use microwave, which will mean it won't have to lease fiber from players like AT&T (NYSE: T) and Verizon (NYSE: VZ). According to Re/code, which first reported Sprint's network plans, the revamp of its network towers and backhaul could save the company $1 billion and begin as soon as June.

But analysts are skeptical about the speed with which Sprint will be able to make these changes to its network. In a research note, Walt Piecyk, analyst with BTIG, said that neither American Tower nor Crown Castle seem aware of Sprint's plan and typically tower leases extend for five or more years, making it unlikely that Sprint could move off its existing towers quickly.

In addition, migrating antennas off existing towers to towers and other structures on government land will require substantial manpower and will rack up relocation costs, according to Evercore ISI. Plus it will also require network management and tuning once those antennas are moved.

"Our industry contacts pointed to two primary reasons why relocating equipment could be challenging: (1) substantial labor and other relocation costs, and (2) interim network management," Evercore ISI wrote in a research note. "As to this second point, because tower leases do not roll over on a city-by-city basis, [Sprint] would only be able to relocate a handful of sites each year per market. Attempting to relocate just a few towers could create meaningful network topology challenges. Finally, we also believe a shift of this sort would create meaningful network service disruptions -- not dissimilar to those experienced by [Sprint] customers during Network Vision."

Although Sprint's plan to move off existing towers seems to have caught many by surprise, the company has been talking about increasing its small cell deployments and moving to wireless backhaul for some time.

Last summer RBC Capital Markets analysts Jonathan Atkin and Brian Hyun said that the company was planning to deploy as many as 70,000 small cells and that the small cell network might be constructed by a network partner and not Sprint, allowing the operator to keep the expenses off its balance sheet. At the time, the analysts expected that Sprint would use equipment makers Nokia (NYSE:NOK), Airspan and Mobilitie for the project.

In addition, RBC said that the network elements would be "mounted on utility posts, lamp posts and similar infrastructure" and would be integrated with wireless backhaul, thereby speeding deployment time.

Interestingly, the Re/code report said that Mobilitie is one of the vendors Sprint is working with to locate its cell towers on government land. Representatives from Mobilitie did not respond to questions from FierceInstaller sister publication FierceWireless on the topic.

As far as the switch to microwave backhaul, although microwave has not been widely used in the U.S., vendors such as Ericsson (NASDAQ: ERIC) have predicted it will become the dominant backhaul by 2020, handling backhaul for 65 percent of cell sites.

Sprint's efforts to slash its costs are not surprising. The company has been struggling and has not posted a profit since 2006.

For more:
- see this BTIG post (reg. req.)
- see this Re/code report

Related articles:
Report: Sprint to deploy 70K small cells nationwide with help of a network partner
Sprint CEO Claure meets with Miami's mayor, providing window into future network plans
Sprint CTO Stephen Bye resigns from company amid new network densification program
Analyst: SoftBank's Son taking more active role in Sprint's network as densification planning nears completion