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Brier Dudley's blog

Brier Dudley offers a critical look at technology and business issues affecting the Northwest.

August 31, 2011 at 9:00 AM

Sprint president on AT&T, T-Mobile merger, LTE

Steve Elfman seems pretty relaxed, but maybe that’s because he’s in the eye of the storm.

As president of Sprint’s network operations, Elfman, 56, is in the middle of most of the big, emerging stories in the wireless industry.

He’s also part of the local wireless mafia, a veteran of AT&T Wireless from the old days in Redmond. He went on to Bellevue’s InfoSpace and Motricity before joining his old boss, Dan Hesse, at Sprint in 2008.

Although he’s based at Sprint’s headquarters in Overland Park, Kan., Elfman kept his Redmond-area house and still calls himself “a Seattle guy.”

The network he runs is powered in part by Kirkland’s Clearwire, which is largely owned by Sprint. Both companies are moving toward LTE technology, which is emerging as the standard for mobile broadband.

Sprint also is a likely beneficiary of the new LTE network Clearwire announced Aug. 3.

Sprint’s product lineup has set the pace for advanced smartphones, launching the first 4G model in 2010 and a 4G model with a 3-D display and camera in June.

Sprint also reportedly is going to carry the new iPhone debuting in October. Elfman wouldn’t discuss the Apple deal, but Sprint is holding a big media event Oct. 7 to talk about the company’s direction.

At the same time, Sprint is the leading opponent of AT&T’s proposed acquisition of T-Mobile USA, which would further extend its lead over third-place Sprint.

As part of Sprint’s merger attack squad, Elfman flew into Seattle Tuesday — on a float plane from his summer place in the San Juans — to drop a few bombs in meetings with the media and others in the area.

Here are edited excerpts of our conversation Tuesday:

Q: You’re in the middle of a lot of the big wireless stories now.

A: We’ve been really against the AT&T/T-Mobile merger for a few good reasons, and personally there are a couple of reasons, because I’m a Seattle guy.

I started at AT&T Wireless some years ago, and we’ve seen that go away from here. We’ve seen Western Wireless leave here, and now my old friend [John] Stanton’s VoiceStream [which became T-Mobile USA].

You don’t want to see that go and it not be a hotbed any longer of telecom. There’s that personal side of it; it really changes to me the landscape of what Craig McCaw started here some years ago.

Q: T-Mobile has been the lower-cost carrier, and Sprint also fills that role, by positioning itself as a value option. Won’t Sprint continue to do that if the merger happens?

A: We’ll try and do it. T-Mobile and ourselves, we went after similar demographics, but different ones. They were really leaders in driving the price down. What we’ve been more is the value (option) — you get more for the same price or a slightly better price.

Between the two of us, we kind of kept the market having reasonable prices, both value and low price. So I think that is another one that starts to go away and that will drive prices up. We will try our best to be the alternative, but when you’re only 15 percent share it’s going to get pretty hard for us.

Q: You say AT&T has enough spectrum already. How does that track with the industry’s broader complaint that there’s not enough spectrum available, and it needs more spectrum freed up from TV broadcasters?

A: Having more spectrum is a good thing. But having spectrum and using it is an important thing. These guys … they’ve got more spectrum in their warehouse than I’ve got and they’re not using it.

But the need for more spectrum for all of us over time continues to be important because of data usage. We will all need more spectrum, but the argument that they needed T-Mobile to give them more spectrum to be able to serve rural [areas], that is totally bogus. Five years from now, they’ll probably need more spectrum. I would agree with that.

Q: What about their argument that this will accelerate their build-out of LTE, by using one network for LTE while operating the other in its current setup?

A: They can do that now. They can even do it with the stuff they’ve not got warehoused. I’m doing that kind of stuff right now with our network vision. …

T-Mobile has done an awesome job of going to HSPA+ [network technology T-Mobile markets as 4G] and they have been spectrum-constrained, but they’ve really done a great job. Even though I don’t believe it’s 4G — it’s faux G — but they’ve still done a very good job of having a good performing network.

Q: A year or two ago you wouldn’t have praised them. Your network was your big selling point over T-Mobile.

A: I think that ours is still an advantage because we’ve got a real 4G network, the WiMax network we’ve got with Clearwire.

Q: Everyone was expecting T-Mobile to make some kind of move, and perhaps hook up with Sprint. What if the AT&T merger falls through? They’ll still have to hook up with someone, won’t they?

A: I think T-Mobile will need to hook up or do as we do — partner with a Clearwire or others, or (LTE provider) LightSquared, as we have done. The smaller guys like us and them — and I know it seems odd to call ourselves small, but when you’re around the monopolists you’re quite small — you’ve got to do some creative things.

Q: What I’m getting at is that some consolidation was inevitable.

A: Yeah, I think there’s inevitability in this industry, like others, to get some consolidation.

Q: Five years from now, what’s it going to look like? Will 3G be gone, and will there be three big players in the industry?

A: I don’t think 3G will be gone. It’s unclear to me what the landscape in five years will look like if this [merger] goes through. I do think if this doesn’t go through, consolidation and strengthening a third player is a fairly good option.

Q: What about the networks in five years? Will LTE be dominant and WiMax just supplementing it?

A: I think LTE is showing itself globally to be pretty much the dominant standard so I think that’s probably a yes.

WiMax is still a great product and working very well for us. We’re not at this point in time announcing anything other than what we’re doing.

But our network vision build-out is one that allows us to use the different types of spectrums, different technologies and will determine the right time to use the right technology.

Comments | Topics: 4G, T-Mobile, Telecom

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