Article: Fixing Sprint

by on January 26, 2016

If I had to guess, most of the coverage on this site would be overwhelmingly about Apple, followed by Google, Microsoft, AT&T, Verizon, Samsung, and T-Mobile in some order. Notably, Sprint doesn’t seem to come to mind, not because they aren’t making news, but have been such a small player in the world of topics I write about, namely Apple. That’s not a bad thing, since there are plenty of other devices available that people enjoy, but I think it’s time for an intervention in Overland Park, Kansas.

The mobile carrier side of Sprint is what I’ll be focusing on, mostly because that’s all that’s left and the landline business that was spun off as Embarq really plays no role in this argument. Despite a record-setting quarter, things aren’t going so well, as explained by Pavel Alpeyev and Takashi Amano for Bloomberg:

SoftBank paid $22 billion for a controlling stake in the No. 3 U.S. wireless operator at the time. That investment has lost $7.3 billion in value, according to SoftBank, and Sprint is now the No. 4 carrier. Hiroe Kotera, a spokeswoman for SoftBank, declined to comment. […]

Sprint closed down 10 percent on Friday after a report said the company was finalizing plans to cut $1 billion in network costs through measures analysts called risky. Sprint is working to move radio equipment to spots on lower-cost, government-owned properties, according to a report in Re/code.

That bad news, mixed with the general perception that Sprint has terrible coverage everywhere, give me pause how this situation can be righted. Even in many metropolitan areas, Sprint has rough coverage (I’ll give them credit that some cities do have exceptional coverage). They have rolled out some new technologies, but so did everyone else. There was also the perception that Sprint never had great phone choices and the whole experience just felt cheaper. Even now, everyone else lets you bring LTE devices of your own, but Sprint still seems to fight to have Sprint-sold devices, rather than just selling you a SIM card.

However, I’m not here to nitpick, but rather throw some ideas out there how the nation’s #4 carrier can try to save itself. For the sake of competition and the memory of the early 2000s where Sprint’s network was excellent, I’m rooting for them to turn things around, and hope this article does become a funny joke in a few years, rather than just a tick in the eventual downfall of Sprint.

Fix the Network

From a purely technical standpoint, lower frequencies travel further and penetrate buildings better. This is why AT&T and Verizon have always had a leg up on the competition in many markets, and T-Mobile is starting to get to the party with 700MHz, but only on select devices (iPhone 6s/6s Plus, some Android devices). If my research is correct, the ill-fated Nextel merger gave Sprint a lot of 800MHz coverage. Equipment will have to be replaced/modified, which will cost money, but improving towers in large cities will help start to change the attitude that Sprint is sub-par and show measurable progress. It’s working for T-Mobile, even if you end up on 2G in some rural areas. The one problem is that the 800MHz block is rather small, so they’ll need probably use LTE on the 1800/1900MHz bands, again, much like T-Mobile for additional speed and capacity.

Next, since most modern LTE devices are designed to work on multiple carriers, why not a few short-term roaming agreements to fill in the gaps? It’s got to be cheaper than building towers overnight and providing backhaul to them.

Sprint also was working on a new project, called Network Vision that involved improving the network. Under former CEO Dan Hesse, this project was mostly completed, but stopped to focus on the worst areas only and deploy other items. This seems to be the institutional norm, as Sprint seems to be better at starting projects, rather than finishing them.

Retail?!

Sprint has had a long relationship with Radio Shack, and even with Radio Shack’s demise, a lot of former stores became Sprint locations. We really don’t need more locations to buy phones outside of the big box stores, electronics stores, company-owned carrier stores, or independent dealers. On the one hand, it’s nice to have a close place for customer service, there’s a lot of overhead with either running your own stores or managing dealers. Cut the number in half and have some halo locations in larger markets, much like AT&T has been doing. Although there aren’t as many other services as AT&T (DirecTV, U-verse, DSL, home phone, home security, depending on the market), a nice place could give potential customers the feel that you’re doing better. Don’t copy Apple either—it’s been done enough.

Innovative Pricing

T-Mobile has been trying a lot of new things over the last few years, and it’s been almost tough to keep up. Sprint has been providing a lot of the same, or offering ridiculous plans that the average person doesn’t want or need. They’ve also tried to undercut the competition with limited, too-good-to-be-true feeling deals. Since all of the large carriers have done away with subsidies, you can come up with interesting options. How about being the first to offer a limited number of minutes and some data for those who are still hanging on to their flip phones? It seems that $50-$60 is the sweet spot for individual customers on most carriers, so try some sort of cheaper, limited plan (I know texts and voice calls are really not the items that put a strain on the networks, but not everyone needs unlimited).

The funny thing is that Ting offers more innovative pricing, yet uses Sprint’s network. Even Project Fi, which uses Sprint some of the time (T-Mobile and Wi-Fi the rest of the time) is doing an innovative mix of actual usage and base pricing. It’s pretty bad when those who repackage and resell your services are appearing to create a better value.

Rebrand

Although Sprint has had a long history in the wireless business, it might just be time to find a new name and start from scratch—buy someone else, give the appearance that they bought you to the consumer that things are new and exciting. AT&T is probably the best example, as the original AT&T Wireless was a disaster, ended up being sold to competitor Cingular (a joint venture between BellSouth and SBC). SBC bought AT&T (the long distance provider and former parent of AT&T Wireless) and took its name, along with rolling out a new logo and marketing campaign, and then bought BellSouth, which eventually led to Cingular being rebranded as AT&T to match its parent company. By that point, those who were sour about the original AT&T Wireless had either forgotten or were content with someone else. The company also bought Cricket Wireless, mostly for the spectrum, but reused its name for the former Aio budget subsidiary.

Hell, call the new service Nextel.

Sell

The other option might be to just hand everything over to someone else who might be willing to try to do a better job. Dish Network owns quite a bit of spectrum that is unused at the moment, and might be interested in trying to compete with AT&T on the cellular+TV front. Then again, Dish already has a smaller customer base, as contrasted with DirecTV and may not be able to financially support such a purchase.

There’s always some cable provider that they could partner with, most likely Comcast. Although I’m not a fan of America’s Favorite Cable Company™, they do have a large footprint and can also compete in the combined bundle game. They could also improve backhaul in some areas where they have existing infrastructure.

There’s also a chance Frontier Communciations or CenturyLink might be willing to get involved. They already have been buying up landline operations from everyone else, but this would be a good way for the #3 and #4 landline businesses to offer additional services.

With any of these, the buyer could involve themselves in branding or create something entirely new, as mentioned in the previous section. Sprint could also unload some radio spectrum to raise cash, but that’s mostly a quick-fix. It might slow the bleeding, but it won’t change perceptions or attract customers.

The idea of Sprint merging with another large carrier is pretty doubtful, since the government already blocked the AT&T/T-Mobile merge and the T-Mobile/Sprint merger fell apart due to doubts.

Give Up

I would assume that a company like Sprint would probably be deemed too big to fail, so there would be some bankruptcy protection, and may some assistance to raise some additional money. Still, in a worst-case scenario, there might be a firesale of spectrum and customers, even if it was split amongst larger carriers, regional carriers, and anyone else wanting to get into the business. I think this would be the worst-case scenario, but it should at least be mentioned.

Regardless of what happens, it might be worth keeping an eye on this company, as whatever the outcome might be will likely have an effect on the other carriers and the industry as a whole. As I’ve said, I’m hoping they’re able to turn things around, so we’ll just have to stay tuned.

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