After spending much of 2000 sitting on its hands, waiting in vain for regulators to approve its merger with WorldCom, Sprint intends to vastly improve its network and services in 2001.
In interviews held at Sprint headquarters in Kansas City, executives outlined plans to add local voice to the provider's Integrated On-Demand Network (ION) service for corporations, prepare its PCS network for high-speed wireless services, and invest heavily in metropolitan-area and international fiber to boost its SprintLink IP backbone.
Sprint has watched its main competitors -- AT&T and WorldCom -- split business units in an effort to combat lagging long-distance sales, bolster revenue and fight off new rivals. Sprint has remained centralized but like other providers, the nation's third-largest carrier expects data to provide a bigger boost to its revenue in the next two years. Voice accounts for more than 70% of Sprint's revenue, but that will change by 2003 when 50% of revenue is expected to come from data.
For now, Sprint has lots of lost ground to make up after its failed merger with WorldCom.
"During the merger talks, Sprint slowed investment in all its units," says Michael Smith, an analyst with consultancy Stratecast Partners. "There were probably 12 to 15 months of relative inactivity."
Upgrading its ION services will be one of Sprint's primary directions this year. Introduced with great acclaim by Sprint Chairman William Esrey in 1998, ION is still neither fully integrated nor on-demand. ION was supposed to offer customers converged voice and data services over a single pipe connected to Sprint's ATM backbone.
"With business [ION], we are nationwide with data, nationwide with [long-distance] voice and nowhere with local voice," says Len Lauer, president of Sprint's global business market group. Lauer adds that about 40 enterprise customers are using ION for long-distance and data.
Enterprise customers won't be getting local voice as part of ION until later this year. Sprint is about six months behind where it thought it would be in bringing local voice into the ION package, says Fred Harris, Sprint's director of network planning and design. The delay, he says, is due to difficulties in developing a Class-5 softswitch that can offer the full set of features customers get from a traditional Class-5 voice switch, such as 911 service.
"For PBX capabilities, we need a service manager that can do [Primary Rate Interface] T-1 services," he says. "That will be coming out sometime this year."
Sprint is also behind in rolling out dynamic bandwidth allocation as part of ION. Dynamic bandwidth allocation is supposed to let customers take unused voice bandwidth and use it for data. ION users must currently set up permanent virtual circuits for their voice traffic.
The challenge will be for Sprint's sales force to convey the benefits ION could bring to users, Stratecast's Smith says.
"The real question is whether they'll commit the resources to make that happen," he says.
Lauer says Sprint has not been selling ION aggressively to businesses both because of the softswitch development issue and because the company is rollling out a network software upgrade by the end of May.
Sprint is also moving ION to support voice over ATM, which Lauer says more efficiently uses bandwidth.
Voice traffic is now using 128K bit/sec worth of bandwidth, but the upgrade will reduce that to 16K bit/sec, Lauer says.
Financial results from Sprint's ION business underscore the service's slow start: In the first nine months of 2000, ION generated $5 million in revenue (Sprint bundles fixed wireless revenue in here, too). The operating loss for ION over the same period was $458 million. In 1999, Sprint took in no ION revenue and reported an operating loss of $243 million from its ION business.
Sprint is also playing catch-up with its IP-based SprintLink backbone for enterprise data. The provider recently announced plans to extend SprintLink to Europe and Asia, allowing Sprint to better service its multinational enterprise customers.
Sprint currently satisfies multinational demands by buying wholesale international bandwidth from companies such as Global One and WorldCom. By operating its own international infrastructure, Sprint should be able to lower its expenses, which could translate into more competitive rates for companies.
The provider is also making a significant investment in building metropolitan-area fiber rings in 20 U.S. markets.
Until now, Sprint has leased fiber from incumbent local exchange carriers. But Sprint officials say the company can ultimately achieve better profit margins by building its own infrastructure.
Other planned SprintLink upgrades include managed network-based VPNs, voice-over-IP services and an OC-192 network upgrade. Sprint is slightly behind in the OC-192 game.
While AT&T is supporting OC-192 across the U.S., Sprint has yet to deploy its first segment. "We'll have OC-192 by mid to later this year," says Keith Paglusch, president of E-Solutions at Sprint.
Sprint is also developing a network-based IP VPN service that will offer a centralized approach to managing VPNs and faster implementation times. Rather than installing VPN equipment on customer premises, as Sprint does now, network-based VPNs are enabled by service providers through equipment in the carrier network. Currently Broadwing and Savvis are offering network-based VPN services.
Sprint customers will also be able to integrate voice over their IP VPN. Sprint will soon test Lucent voice-over-IP gear based on an agreement the two companies signed early this month.
Although Sprint has fallen behind with some of its wireline services, it is staying ahead of the game in wireless.
The company will start its 3G upgrades later this year, says Paul Reddick, a vice president at Sprint PCS. The wireless group is upgrading its network with Code Division Multiple Access 2000 channel cards that will be installed throughout the carrier's network. The upgrade will increase wireless data transmission speeds from 14.4K bit/sec to 144K bit/sec.
While that's obviously a huge improvement, 144K bit/sec is generally referred to as 2.5G (generation two-and-a-half), says Elliot Hamilton, senior vice president at consulting firm Strategis Group. Sprint will need to hit the 3G (384K bit/sec) mark, he says.
Sprint is also readying its network to improve wireless application support. Today users can work with Sprint to make their application servers running Siebel customer relationship management software accessible via the Sprint PCS network.
Customers can also access corporate Lotus and Microsoft e-mail applications through deals Sprint PCS has with Lotus and Wireless Knowledge.
But Sprint plans to offer wireless application hosting in the near future. The company is in the process of integrating its wireless network with its IP network and data centers, Reddick says.
Customers will be able to host high-end applications at Sprint's data centters. Sprint PCS is using Openwave's UP.Link Servers to communicate between its wireless and IP networks, Reddick says.
By year-end, Sprint says it will offer business users several application hosting options, but would not go into software details.
Reddick says the offering will include messaging, enterprise applications and standard wireless Web content such as a stock ticker information.
If Sprint actually rolls out a suite of enterprise application hosting services that both wireless and wireline users can securely access, the company will be ahead of competitors. AT&T has the national wireless network to offer business users the same type of integration but has clearly stated it does not plan to offer application hosting services.
And WorldCom doesn't offer either. WorldCom resells wireless services from companies such as Sprint PCS and is not offering application hosting services.
This story, "Sprint refocuses on net upgrade, better services " was originally published by Network World.