Finish line recedes for Sprint upgrade
A slump in new subscribers pushes the long-distance carrier to slacken the pace of upgrading its network, meaning it'll take twice as long to finish the job.
Like most major U.S. carriers, Sprint intends to revamp its equipment to take advantage of Internet technology. It announced in November that it would build a network that converts voice calls into bits of data, using the same protocols that ferry traffic over the Internet.
The estimated $1.1 billion upgrade of the phone company's entire network was meant to increase capacity and to cut the cost of adding customer lines by up to 60 percent, by replacing traditional copper phone lines with Net connections.
Mark Chall, a vice president at Sprint, said Tuesday that the long-distance company now intends to upgrade about four million of its telephone lines--about half of its network--over the next six years. He said the Westwood, Kan.-based company might still replace its entire network, which covers 18 states, but it would take 13 years to do so and not the eight years it originally planned.
"When we started this project, we were growing at 5 percent a year," Chall said. "We had economic triggers that justified a very healthy business case to do it all as soon as possible. But our (new telephone customer) growth has pretty much leveled off--the whole industry has. We are being more pragmatic. The economy and the telecom environment have taken some of those hard triggers off the table."
For now, the upgraded equipment will be installed where it's needed most--to serve cities such as Las Vegas that are still generating new customers and to replace aging gear.
The number of local telephone lines controlled by major U.S. phone companies, such as Verizon Communications and the Bells, has been dropping steadily since 2001, according to In-Stat/MDR analyst Norm Bogen. In the first half of 2001, the number of local phone line subscribers on their networks dropped by about 2 percent. Since then, the trend has continued, with the Bells losing 4 percent of their local lines in the first half of 2002.
The main reason for the decline is the growing number of people who replace their landline phones with cell phones, according to Bogen. In addition, more people are signing up for Internet-connected phones as a second phone line rather than going the traditional route. Consumers can choose between services provided over broadband connections, using special software from Vonage DigitalVoice and similar providers, and cable phone services such as AOL Time Warner's service, announced last Thursday.
A representative at Verizon, which has been upgrading its network since 1999, said the carrier is also feeling the effect of the downward-spiraling economic situation that has forced Sprint to change its network upgrade plans. Verizon's network rollout plans, however, remain on schedule.
"Like any prudent company, we've cut our capital spending by 20 percent," the Verizon representative said. "But it hasn't slowed down our plans."