Sprint: Is the Mobile Carrier Destined for the Discount Bin?

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Sprint has made many attempts to try to stay relevant these couple of years. As more and more people have exited from the carrier, the company has shifted from 3rd place to 4th place among the top 4 carriers.

It’s no surprise that the move to WiMAX was a temporary move that gave an edge to the company for about 5 minutes. As soon as the other companies shifted their focus to LTE technology, Sprint started to play catch up.

A once proud and reliable network, it soon got over burdened with the Nextel merger, lack of expansion, and short-gain vision into WiMAX.

It also didn’t help that it failed to secure iPhones into its phone line up. After AT&T’s exclusivity ended, Verizon and T-Mobile jumped on board to provide its customers with the social status defining phone.

WiMAX didn’t roll out to every single major market as it was guaranteed. Instead, it seemed like a half ass attempt at a publicity stunt. Some people left their overcrowded, overly priced, and limited networks for a promise. A promise a few got.

As the company switched to LTE from WiMAX, AT&T and Verizon had deployed, marketed, branded, and established their upgraded networks. Sprint, however, was still charging the same top tier fees to their customers for a second to last network.

Around this time T-Mobile hired John Legere. He is an experienced mobile telecom executive with a passion for Trump-like showmanship. The youthful dressing, Red Bull drinking, Vegas attraction-like CEO, started cutting the prices of T-Mobile’s mobile plans. Asides from cutting prices, he also eliminated phone subsidies from their plans. Not everyone upgrades their phones every 2 years. Some do it sooner, and some do it when their phone dies 4 years later. By introducing phone payments, leases (rent), and yearly upgrades, the company saved in upfront costs. It also let another department handle the financial aspects of the phones.

Asides from this, it also started paying new customers for their early termination fees from other providers. This meant, if you were on AT&T, Verizon, or Sprint, T-Mobile would reimburse you for every $200 early termination line fee. Assuming you still had a functioning phone in that line.
By losing money upfront, the company knew the customer would stay with T-Mobile because people rather complain than switch.

It also rapidly upgraded its network in major areas to LTE to compete with other networks. As soon as AT&T felt the pressure, it offered to purchase T-Mobile. A deal that felt through and filled T-Mobile’s coffers to the tune of $3 billion dollars.

This gift later turned to T-Mobile being able to enhance the network and purchase low cost carrier Metro PCS. A CDMA network popular in low income areas.

Around this time Sprint’s Network Vision was set and rolling out. The premise was to upgrade their 3G network in needed areas, and update their 4G LTE network in bigger cities and cities where Sprint could take market share. The complete overhaul of their system and network allowed for future proof technology that makes it easier and less cost effective to upgrade in the future.
However, this process was taking too long and people where still paying AT&T fares for regional mobile service provider performance.

Sprint started to look for a way to stop T-Mobile’s momentum by accepting a takeover. DISH Network and Japan’s SoftBank made offers to purchase most of Sprint in an attempt to enhance their mobile service expansion.

The network also paid a large amount of money to finally get Apple’s iPhone. Some say, it was way too much money.

Looking back, this is when the second phase of trouble started for Sprint. Softbank’s owner and CEO, Masayoshi Son, agreed to  purchase 72% of Sprint in 2012 (completed in 2013).

Along the way to building a strong 4G LTE network. Softbank also purchased Clearwire. A company that was developing its own 4G data network with high frequency spectrum. A lot of which Sprint shares.

By having the highest amount of high frequency spectrum, Sprint didn’t have to worry about bidding on spectrum. Instead, it needed to focus on expansion.

Part of the reason Softbank purchased Sprint was to later on purchase T-Mobile. By purchasing T-Mobile and Sprint, Softbank would have had the largest amount of towers and multiple bands to expand their network. Since Sprint has a lot of high frequency spectrum, it makes it hard to penetrate building and city structures. By uniting its Nextel Spectrum and T-Mobile spectrum, the company would have embarked in a multi low spectrum network.

Sprint needed a new vision to make this happen. Brightstar CEO, Mauricio Claude, was basically purchased to run Sprint. Son, purchased Brightstar outright to have Claude run Sprint. Claude has stated as much.

The straight shooting CEO started by slashing prices, imitating some of T-Mobile’s promotions, and being honest about their 3rd World-like network and services.

Around this time, it was obvious the US legislators were not going to approve a merger.  If Softbank did try it, it would have had to pay T-Mobile an estimated fee in the billions.

Defeat

Since the merger of Sprint and T-Mobile did not go through, Son had to invest to make the company competitive. Sprint tried swaying people to switch by guaranteeing 50% off their AT&T and Verizon customers. Offering a free year of service to Direct TV customers, $1 Phones (lease), and other deals.

It also purchased Radioshack and its brick and mortar locations. By doing this it uses Radioshack locations as Sprint hubs.

However, the ship has been taking in water. T-Mobile kept on capitalizing on Sprint’s old customers. People with knowledge and dealings with Sprint started to talk.

Management at Brightstar started to feel the cutbacks as Son told Claude, they no longer could spend recklessly to expand. The lack of merger seemed to leave Son with 2 large pieces (Sprint and Clearwire) and one piece of the puzzle missing (T-Mobile).

Around this time Sprint slipped to 4th carrier. T-Mobile had managed to surpass Sprint, which at one point 2 years ago was ahead in subscribers by six figures.

The higher ups at Brightstar have revealed to me, Claude has moved on from Brightstar. They say, he basically stated as much in a meeting. Seeing he is Sprint’s CEO, they still looked at him as their leader, and hoped he could make changes.

At different gatherings, Brightstar executives have stated things will get a lot worse for Sprint and its other subsidiaries. As Son no longer looks at Sprint as a viable option without the T-Mobile merger.
A few months later, Sprint decided to fire, retire, and offer severance packages to several of its key management personnel. Claude noted these people were from the old guard. By cutting the old guard, the company combines jobs, saves money on pensions and benefits, and cuts back on salaries. According to published numbers, Sprint needs to save $2.5 billion in operating costs.

New blood needed to be brought in to compete. I can see that. However, the only company Sprint needs to compete with at this point is T-Mobile. And the new 3rd carrier has a marketing, advertising, and social media department that is far more skillful and cunning than Sprint’s.

They are not afraid to pick on other carriers, make fun of themselves, and put themselves out there. They also have a CEO who knows how to stay relevant, knows how to spin storylines, and is just more media savvy than Claude, who is a typical and serious businessman.

Sprint has slashed prices. Some deals have been good, some have been the same with a new tittle, and some are more expensive. However, their marketing has failed time and time again. The media has criticized Sprint for their marketing and how unclear their message is at times.

Recently, the company has taken to restructure their infrastructure. They are selling their towers, and moving their towers to government owned sites at various locations to cut costs.
This only means more disruptions for Sprint customers who have had to put up with WiMAX, LTE, Network Vision upgrades, and now tower migration/reception issues.

Sprint seems destined to be purchased at a bargain in the near future. In many ways it seems like Sprint has become the carrier it once tried to purchase, T-Mobile. Marginal service, relabeling their plans to be the same or more money, and always part of a takeover rumor mill. 


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