On Air Now

Upcoming Shows

Program Schedule »

Tune in to Listen

650 AM Hibbing, Minnesota

Weather

Current Conditions(Hibbing,MN 55746)

More Weather »
54° Feels Like: 54°
Wind: S 6 mph Past 24 hrs - Precip: 0”
Current Radar for Zip

Tonight

Cloudy 50°

Tomorrow

PM Showers 66°

Thurs Night

Cloudy 51°

Alerts

  • 0 Severe Weather Alerts
  • 0 Cancellations

Sprint grabs lifeline with rural U.S. roaming deals

By Marina Lopes and Alina Selyukh

WASHINGTON (Reuters) - With plans for a T-Mobile US Inc merger in tatters, Sprint Corp is expanding a roaming program with rural cellphone companies that could provide a much-needed way for the debt-laden wireless carrier to cheaply increase its footprint.

In March, Sprint Chairman Masayoshi Son struck a roaming deal with the Competitive Carriers Association (CCA), which represents many U.S. rural and regional carriers, to use each other's networks for roaming at a mutually attractive price.

In June, Sprint announced that a dozen small carriers, covering a population area of 34 million people, had struck roaming deals following the outlines of the CCA agreement.

Sprint and CCA plan to announce another batch of individual agreements to expand the roaming partnerships at an industry trade show in early September, CCA President and Chief Executive Officer Steve Berry said this week.

When Son announced the mutual roaming agreement, many industry observers shrugged it off as a sweetener to soften U.S. regulators' opposition to a T-Mobile acquisition. Rural carriers have long complained about the difficulty and expense of getting the largest carriers, Verizon Communications Inc and AT&T Inc, to let customers of smaller providers onto their networks.

Deals with rural carriers could offer Sprint a lifeline to improve its national presence following the collapse of the merger with T-Mobile. So far, Sprint has already saved an estimated $1.7 billion in costs of building new towers and other infrastructure, according to a source familiar with the calculations.

Sprint's new CEO Marcelo Claure said that the networks of rural carriers "are really important in places where we haven't and don't intend to build our network."

CHEAPER ROAMING

The 12 mutual roaming agreements already signed with rural and regional carriers, including Virginia-based nTelos Wireless and Mississippi-based C Spire Wireless, have added 352,000 square miles to Sprint's service territory, which like T-Mobile's has been largely concentrated around metropolitan areas while Verizon and AT&T's coverage stretches nationwide.

"It's a business relationship that's frankly bred out of necessity," said CCA's Berry, explaining that the agreement helps rural partners share savings with Sprint while staying competitive. "You've got to have a roaming partner."

Claure's challenges are complex and long-term as the company struggles to recover the millions of customers it lost during its messy network overhaul in recent years. The task is particularly tough in a nearly saturated market and with No. 4 T-Mobile pushing to leapfrog Sprint as the No. 3 U.S. carrier.

Sprint's debt is equivalent to 147 percent of its market cap, compared with 55 percent at Verizon.

Perhaps because Sprint needs rural coverage more than its rivals, its roaming agreements offer the carriers more perks and more flexibility than they have seen from other companies.

While T-Mobile has offered some roaming agreements, experts say Verizon's rural program is the only comparable alternative that offers rural carriers nationwide 4G roaming.

Verizon's program, however, largely limits partners to building networks that rely on airwaves owned by Verizon, while Sprint's allows them to use their own spectrum. Sprint's partners also say it offers more attractive roaming rates.

"It's one thing to get a roaming agreement, it's another thing to get a roaming agreement with non-punitive roaming rates," said Eric Graham, senior vice president of strategic relations at C Spire.

Roaming agreements are notoriously secretive, with companies signing non-disclosure agreements about rates. Verizon says its roaming rates reflect the value of its nationwide network.

Another major perk Sprint offers is access to devices at cheaper prices negotiated with handset distributors, solving a major problem for smaller carriers who are often stuck paying top dollar for devices because they lack their competitors' scale.

Claure's appointment as CEO may lead to even better handset prices.

The Bolivian-born entrepreneur made his fortune through a cellular phone wholesale business called Brightstar which has close ties with handset makers and may provide better access to the latest smartphones at decent prices both for Sprint and its partners.

(Editing by Grant McCool)

Comments