One of the most important things a carrier needs to do is manage its own network. In the past the mere thought of having an outsider do this work would have been considered heresy. I will go one step further. Twenty years ago if someone told me that they wanted to outsource network management for the network, that person would have been fired in a heartbeat.
The mere thought of anyone managing my network is bit unnerving because it is about network control.
Why in the world would Sprint commit the ultimate crime in network operations: Letting someone else take care of your network? Yes the company Sprint has retained is Ericsson but yikes. The answer is simple. Sprint needs to get its operational cash expenditures under control and the best way to do that would be outsource its network management to an outside party.
The fact is that the art of network management has changed over the last 20 years. The fact is there are tens of thousands of professionals who are not part of the established big carrier base who know how to run networks. As time has gone by telecom networks have grown to look increasingly a lot like business enterprise networks. True a public telecom carrier network is several orders of magnitude more complex and bigger than a simple business network but the operating procedures are largely the same.
My fears of 20 years ago are largely allayed by the extent to which network management skills have spread.
In short, I agree with Sprint’s decision.
As much as I am old school about managing your own network. The reality is that Dan Hesse is doing the smart thing. Network operations is a huge cash eater for any telecom carrier. Sprint needs to grow its cash reserves. I am still a little uneasy at the thought of an outsider running Sprint’s network but then again the actual staff running the network will not exactly be outsiders; they are all going to be former Sprint employees. Ericsson has been in the game for over a century and should by now know how to run a network. Ericsson is Sweden’s premier telecom think tank, network designer, manufacturer, and operator.
FYI to analysts who think big iron vendors know how to run networks because they design and build them – not true. Ericsson does know how to run networks.
I think the move by Sprint fits into what appears to me the company’s strategic move into content provisioning and management. Telecom is changing; it is no longer about minutes of use, it is rapidly becoming about charging for the value of telecom services and media services. Sprint needs to move away from the distraction of the day-to-day management of the network.
We are seeing a fundamental shift away from the old minutes of use revenue model for carriers to one that includes content driven pricing and CPMs (cost per thousand page impressions). Running a network is getting to be a royal pain and very complex. A big problem with running your own network is the continual training that needs to be done with staff. Training is expensive and time consuming. If you outsource the network management function all of the training and costs issues become someone else’s problem.
Sprint needs to focus on cash generation now. As important as I seeing running your own network is, one needs to be realistic with resource expenditures. It is a matter of choosing the lesser of two evils; either you outsource the network management function or continue burning through your cash.
Carriers like Verizon, manage their own network but then again Verizon is in a different place at this time and frankly did not have to contend with the likes of trying to integrate the old Nextel network. I am amazed that Sprint was able to spend so much time and cash on managing two disparate networks - Sprint and Nextel. The retention of Ericsson will eliminate a management h