Sprint's plan of attack

Sprint Nextel reported its third quarter earnings yesterday, and although the company had its biggest sequential uptick in gross subscriber additions in years, it still lost 545,000 net wireless customer in the quarter, including net losses of 801,000 postpaid customers.

At a time when its two larger rivals, AT&T Mobility and Verizon Wireless, are adding customers at a very strong pace (AT&T added 2 million net adds in the quarter and Verizon added 1.2 million), the thought of more subscriber losses should be troubling for Sprint. I spoke with Sprint CEO Dan Hesse yesterday after the firm's earnings announcement and he was realistic about the task ahead. He acknowledged that Sprint still has a long way to go to get back to positive subscriber growth.

I don't think devices alone will be enough to prompt subscribers to go to Sprint. Although the company has announced two Android phones (the HTC Hero and the Samsung Moment) to its lineup as well as one of the better BlackBerry devices on the market (the Tour), and two devices using the Palm webOS platform (the Pre and the Pixi), Sprint likely won't enjoy the iPhone-style growth of AT&T.

But not all is lost. Hesse has been bold this year, and deserves praise for taking several steps to improve Sprint's overall position in the market. The introduction of Sprint's "Any Mobile, Anytime" plan in early September, which offers unlimited mobile-to-mobile calling to any wireless number on any U.S. wireless carrier at any time, was a smart move. Explained Hesse of the offering: "We said, hey, let's just completely eliminate calling circles and do something even more powerful." It's still too early to tell if the plan is making a difference, but with continued marketing, I think it could lure customers looking for a great value to Sprint.

Hesse's other big bet is on 4G, via Sprint's Clearwire partnership. Sprint has launched mobile WiMAX service in 17 markets as a wholesale partner of Clearwire, and will launch in some large markets--Boston, Houston, New York, San Francisco and Washington, D.C.--next year. Hesse knows the key to success with 4G (aside from just getting the networks up and running) is having compelling devices. Next year, Hesse said Sprint will introduce its first 3G/4G dual-mode smartphones.

If Sprint can tangibly demonstrate the benefits of 4G via a slick smartphone while Verizon Wireless is still rolling out its first LTE markets, it will both give more credence to the claim that Sprint is the leader in 4G and show consumers that Sprint can still be innovative.

As Hesse and the Sprint executive team are learning, it takes a long time to overcome a reputation for poor customer service--and even longer for perception to catch up to reality. Yet Hesse remains confident that his bold moves will pay off. The market will ultimately decide, but if Sprint can combine its innovative and daring price plans with a more robust 4G offering, I think Hesse and Sprint will have plenty of reasons to be confident. For more of my interview with Hesse, click here. --Phil

P.S. Please be sure to check out our Top 25 Most Powerful People in U.S. Wireless 2009 list. Hesse is on there, along with many other top executives.

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