Sprint Corp. may have waved goodbye to its integrated on-demand platform last year, but the company’s goals in the post-ION era remain essentially the same.
Sprint still wants to offer business customers a migration path for converged voice and data services. The difference is that the services will be based on an IP backbone, instead of the ATM-based ION service, and customers can adopt the converged services at their own pace instead of experiencing a dramatic cutover.
The cornerstone of Sprint’s new strategy is its IP VPN services. Sprint has offered IP services over its SprintLink IP backbone for years, but with ION finally dead and buried, the company says it is more committed than ever to enhancing its IP portfolio.
At ComNet 2002 last month, Sprint unveiled its IP Intelligent Frame Relay service, designed for customers who want to send IP traffic between multiple sites and avoid the cost of setting up a dedicated permanent virtual circuit (PVC) between each. The service requires only one PVC between each site and Sprint’s frame network.
“We’re focusing on services that will allow IP to coexist with frame and private-line environments,” says Len Lauer, president of Sprint’s global business market group.
Customers have a lot of money invested in frame and private-line customer premises equipment (CPE), Lauer says, and they don’t want to abandon those investments. Letting customers gradually migrate from frame and private line to IP VPNs is crucial to Sprint’s success.
If a customer had 200 frame relay nodes, 20 could be immediately converted to IP VPNs, 180 could remain frame-based, and every quarter Sprint could move another 20 over to IP, Lauer says. This would let customers gradually shift from networks they’re comfortable with and let them get more life out of the frame and ATM CPE they invested in.
Another IP-based service Sprint likely will introduce by midyear is network-based VPNs. Sprint already offers CPE-based VPNs, but the network-based service would let customers implement an IP VPN without having to invest in equipment, says Patrick O’Malley, president of Sprint’s business unit.
The network-based service is in trials based on Cosine equipment, which will reside in Sprint central offices.
Sprint also is using its IP network to let customers converge their voice and data traffic. But unlike ION, which included a local voice component, Sprint’s IP voice offerings are designed to let companies reduce long-distance bills on intraenterprise voice traffic.
While Sprint has dumped the ION initiative, the company hasn’t tossed all its ION gear. DSL played a role in Sprint’s ION plans. The provider deployed DSL access multiplexers in about 2,000 central offices to provide last-mile voice and data access for small and midsize business customers.
Sprint is keeping about 750 of those central offices in 32 markets and is using them to provide data-only DSL services. The target market, Lauer says, includes small and midsize businesses, and companies looking for high-speed links to branch offices.
On the voice side, Sprint’s biggest challenge likely will be defending its turf against the regional Bell operating companies – Verizon, SBC Communications, Qwest Communications and BellSouth – as the RBOCs gain approval to offer long-distance in their home territories. While Lauer acknowledges it’s a concern, he’s confident Sprint will come out on top. And while Sprint may lose some residential customers, Lauer says he doesn’t believe businesses will flock to the RBOCs.
“RBOCs don’t have the brand out of region,” he says. “They don’t have the distribution capabilities, they don’t have the network.”
Not surprisingly, last year wasn’t great for Sprint financially. The FON Group, which represents Sprint’s wireline assets, saw its revenue shrink more than four per cent from about $17.7 billion in 2000 to about $16.9 billion in 2001. The PCS group remains Sprint’s star – last year, its revenue soared 53 per cent from about $6.3 billion to $9.7 billion.
Robert Rosenberg, president of Insight Research, says Sprint is moving along the right path. “I think they have a clear vision of what the end customer wants,” he says. “That’s a telecom package that does it all.”
Rosenberg still says the idea behind ION – offering an integrated voice/data package – was sound. Sprint just bet on the wrong technology. “What sank ION was that it was based on an ATM fabric at a time when there was a massive industry shift towards IP,” he says.
Another potential selling point for Sprint is that the provider is one of the few innovators in the market, Rosenberg says. “I don’t think you’re going to be seeing a lot of innovation from the likes of Verizon, SBC, Qwest and AT&T,” he says.
Last year, Sprint concentrated on building out its IP backbone, adding connections to Europe and Asia for U.S.-based multinational customers.
This year, Sprint plans to extend its long-haul IP network into metropolitan areas in the U.S. and overseas.
Sprint’s domestic metropolitan-area network (MAN) plans were put on hold briefly last November when Metromedia Fiber Network, the company supplying Sprint with dark fiber in 10 metropolitan markets, ran into financial problems. Metromedia’s difficulties are cleared up, Lauer says, and Sprint is forging ahead.
In addition to the 10 networks Metromedia is building out, Sprint intends to build in 10 other MANs using other dark-fiber providers.
Once it has its own MANs in place, Sprint can provision its customers more quickly, Lauer says. Sprint currently relies on incumbent carriers to provide last-mile access, and Lauer says ordering new circuits can be a lengthy process.
By year-end, Sprint intends to have MANs running in 11 metropolitan markets.
Sprint also is looking to enhance its networks overseas. MANs will be built out in some major markets if there’s enough demand. And Sprint plans to add ATM and frame access overseas.
“We’ve found that quite a few of our U.S. customers, as much as they want to move to IP, they’ll be staying with frame and ATM for a number of years. And they’ve asked us to add ATM and frame switches in some locations,” Lauer says.
On the wireless front, Sprint had planned to use multichannel multipoint distribution system (MMDS) technology as a last-mile tool for reaching residential users and small businesses. But late last year, Sprint put its MMDS plans on hold. The company will continue to serve its 50,000 customers but has no plans to add more until it can roll out next-generation MMDS technology.
Existing MMDS technology requires a line of sight between a subscriber and a tower, limiting the number of customers a tower can serve, Lauer says. Adding a customer also requires a truck roll and a lengthy installation process that can take up to two hours.
“It wasn’t profitable for us to continue that,” Lauer says.
Next-generation MMDS gear doesn’t require line of sight and uses simple end-user equipment that can be self-installed. Sprint will trial the technology to see if it can be profitable before making any commitment, Lauer says.
Sprint’s other wireless service, its PCS unit, continues to be a linchpin of the provider’s strategy.
This summer, Sprint will upgrade its network to support higher 3G data transfer rates. The higher transfer rates will let Sprint roll out more mobile corporate applications.
One service Sprint will launch this year is an e-mail application called Business Connect, which, unlike other offerings of its type, will let customers send and receive attachments.
Sprint will offer the e-mail application in two flavors. If a company wants to host it, Sprint will provide the network service. But if a company doesn’t have the resources to do the hosting in-house, Sprint will offer a hosted service