Sprint to Place Big Backhaul Bet

Jeff Baumgartner
LR Cable News Analysis
Jeff Baumgartner, Senior Editor, Light Reading

Sprint Corp. (NYSE: S) has issued a big request for proposal (RFP) for fiber-based cellular backhaul, and AT&T Inc. (NYSE: T), Time Warner Cable Inc. (NYSE: TWC) and Comcast Corp. (Nasdaq: CMCSA, CMCSK) are poised to grab most of the initial buildout, Light Reading Cable has learned.

Sprint, sources say, has recognized that it will need to connect its towers to fiber in order to handle the expected surge in traffic that will be coming by way of its own anticipated Long Term Evolution (LTE) buildout and what might come of its relationship with LightSquared . Nearer-term, there's also speculation that Apple Inc. (Nasdaq: AAPL)'s iPhone 5, sure to be a big eater of bandwidth, will support Sprint's 3G CDMA network. (See Sprint Tiptoes Around the iPhone 5, Sprint Hastens to Join US LTE Race , Sprint's $13.5B Jump to LTE With LightSquared and Sprint's Many Possible Flavors of LTE.)

"They know that microwave won't cut it. It [the backhaul RFP] is for real," says an industry source who's familiar with the plan. "Everyone is revving up getting ready for it."

A Sprint spokeswoman confirmed that the company is issuing RFPs for backhaul on a market-by-market basis but would not comment on who is in line to win any of that business.

Sprint might reveal more about its backhaul plans on Oct. 7 when the company outlines its 4G plans and Network Vision strategy. It's been widely reported that Sprint will start its LTE deployments as early as the first quarter of 2012. (See Sprint's Strategy Meeting Isn't So Mysterious.)

In an ironic twist, it appears that AT&T, one of Sprint's key wireless competitors, will get a big piece of a first round of buildouts, said to involve about a dozen of Sprint's largest, most concentrated markets, including Atlanta, Chicago, Los Angeles, Boston, Washington, D.C., and New York City. "AT&T cleaned house," says a source, noting that AT&T already had an advantage because it had fiber near a lot of the tower locations initially targeted by Sprint. Plus, "AT&T dropped its pants on pricing."

Time Warner Cable and Comcast are expected to get the bulk of what's left over in the initial deployment. The value of phase one was not immediately known, but deployments are said to be getting underway this year and ramp up considerably in early 2012. One person familiar with the project expects phase II to be even more lucrative for all backhaul providers.

It comes as no surprise that Sprint has given fiber the vote over more microwave and T1 tower connections. "AT&T and Verizon started to look toward fiber as a more reliable means to connect up these towers," says Karen Brown, senior director of industry intelligence at One Touch Intelligence . She notes that Sprint's plan to use a modular system that separates out the antenna components from the radio interfaces position it well to latch on a common backhaul system.

Cable's opportunity
Sprint isn't saying how much of its $5 billion upgrade is tied to a backhaul upgrade, but its strategy will give cable operators an opportunity to expand their share of the cell backhaul market.

U.S. cable operators currently provide backhaul to 7 percent of the nation's 253,000-plus cell sites, with about 18,200 of them wired up by MSOs, according to Heavy Reading senior analyst Alan Breznick. He estimates that TW Cable has at least 7,600, followed by Comcast (6,000-plus), Cox Communications Inc. (2,000-plus) and Charter Communications Inc. (about 1,000).

Breznick says domestic MSOs ended 2010 with about $200 million in cell backhaul revenues and expects that number to rise to $500 million this year as cable ops expand their presence to more than 25,000 cell sites.

— Jeff Baumgartner, Site Editor, Light Reading Cable

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