W I R E L E S S R E P O R T
Sprint Races to 3G
By Owen Thomas, March 23, 2001
Sprint PCS chief Chuck Levine promises to upgrade his company's wireless network as soon as this year.
"Please forgive Chuck Levine if he sounds a little smug when he talks about Sprint PCS's plans for its third-generation wireless network. At a press conference this week in Las Vegas for attendees of the annual CTIA Wireless conference, Levine, the president of Sprint's wireless division, could hardly contain his glee as he discussed rivals that may not be prepared to follow Sprint's lead.
For months, the wireless news has been dominated by reports of the billion-dollar investments carriers have made in spectrum for third-generation (3G) networks. 3G networks promise high-speed data and the possibility of lucrative Internet services -- but with markets crashing and spectrum bills becoming due, many carriers are postponing the buildout of their 3G networks.
"The European Commission is investigating high debt levels among European telecoms," Levine said, reading from his laptop. "One2One [a German wireless carrier] may take 10 years to break even on its UMTS investments." (UMTS, or Universal Mobile Telecommunications System, is the third-generation wireless technology most likely to take off in Europe.)
Sprint, by contrast, has been practically penurious in buying spectrum. Sprint PCS, according to Levine, has spent only about $3.4 billion on acquiring coast-to-coast coverage, plus about $280 million on the most recent spectrum auctions -- while Verizon forked over $4 billion just to lock up additional spectrum in New York City. And Levine says Sprint's spectrum will last it through 10 years of growth.
How is Sprint achieving such spectral thriftiness? Five years ago it picked a technology called Code Division Multiple Access to build its wireless network. CDMA was once seen as an oddball choice -- especially as Europe and many Asian countries standardized on the rival GSM technology, and U.S. carriers largely chose TDMA.
Now, according to Levine, Sprint's bet is paying off. Sprint will spend about $750 million a year in 2001 and 2002 to upgrade its network to CDMA2000, a high-speed, third-generation wireless technology that's a simple upgrade from CDMA. Three-quarters of a billion may sound like a lot, but it's a small chunk of Sprint PCS's yearly $5 billion capital budget. Meanwhile, companies that picked GSM are facing costly "forklift" upgrades to the next-generation UMTS standard -- that is, each will have to replace its entire network at enormous cost.
While Levine touted CDMA2000's data capabilities, the more immediate payoff may come from doubling Sprint's call capacity and lengthening handset battery life. (CDMA2000 improves on earlier CDMA technology by compressing calls and "waking" handsets for shorter periods of time.) The upgrade is scheduled to be completed by the end of 2001 or in the first quarter of 2002, well ahead of competitors' schedules. And if financial markets remain tight, Levine claims, Sprint's advantage could widen. Granted, Sprint said last November that it planned to raise $3 billion in equity to finance the wireless division's cash needs, and with PCS shares down 75 percent from their peak values, that financing could prove more expensive. But compared with competitors like Verizon, Sprint is sitting pretty in the race to 3G. That's reason enough for Chuck Levine to keep smiling.
More Headlines
Nokia GPRS Phones to Be Four Times Faster Than GSM
Nokia Expects 3G Takeoff in 2003
Japan Telecom Delays 3G Launch
Sprint, Cingular to Launch 3G Service
Wireless Execs Point to Spectrum Woes
Additional reporting by Matt Maier."
ecompany.com
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