Sprint contracts day-to-day network operation to Ericsson

Sprint, the number three mobile carrier in the USA made a huge announcement which finally put an end to the rumors of them selling out. Instead, Sprint is outsourcing their network operations to Ericsson. Sprint retains full ownership and control of its network assets, and solely owns network strategy and investment decisions.

In the US, this is a first for a major mobile phone carrier. In the rest of the world, it is a rather common business operation practice. Sprint said that this will allow them to focus on delivering a superior customer experience, innovative services, and popular new devices. Ericsson will provide day-to-day network services expertise, provisioning and maintenance for the Sprint-owned CDMA, iDEN and wireline networks.

Ericsson will hire 6,000 of Sprint’s staff. The transferred employees will become part of Ericsson Services Inc., a wholly-owned Ericsson subsidiary based in Overland Park, KS. For Sprint, this means they no longer have employee expenses such as salaries, payroll taxes, health benefits, and retirement. The last two are major expenses for US employers. This also removes Sprint from the liability of providing retraining when an employee is terminated, which in this economy is also a major expense for large corporations.

Ericsson will do all this for between $4.5 billion and $5 billion (USD) over the seven-year term of the contract according to the announcement.

Sprint?s Steve Elfman, President of Network Operations and Wholesale, said that they will be leveraging Ericsson?s world-class leadership in network services, their proprietary tools, and the knowledge of more than 30,000 dedicated and highly-specialized service professionals to power Sprint?s Now Network.

Sprint customers will continue to work directly with Sprint employees as their primary contact. Sprint said they will retain full control of the customer experience, customer technical support, and services review. Elfman confirmed that Sprint retains technology and vendor selections.

Angel Ruiz, head of Ericsson’s North American operations, said that managed services has been successful throughout the world. He pointed out  that Ericsson has more than 15 years? experience in the field with hundreds of carrier contracts. Ruiz claims that today Ericsson manages networks that together serve more than 275 million subscribers worldwide. Additionally, more than 40 percent of all mobile traffic goes through Ericsson’s networks.

We spoke with a former vice-president of network operations for a nationwide communications company. He said that Sprint will have to set goals for Ericsson, have a metric to measure whether those goals are met, and monitor Ericsson’s results daily. He said a company cannot simply hand the keys to their backroom equipment locker, walk away, and suddenly expect everything to magically run properly.

The big question for Sprint is with the removal of network operations and their major remaining responsibility being customer service, will Sprint’s customers see an improvement or not?