with Karen Freitag, vice president of global sales and business development for Sprint wholesale and emerging solutions
Sprint has a long history with mobile virtual network operators, becoming the first nationwide operator to openly embrace this business model and welcome new MVNOs to its network. Over the past several years that strategy has helped the company gain new subscribers even as its core wireless business struggled due to network issues and intense competition.
Just over a year ago Karen Freitag joined the company as its vice president of global sales and business development for Sprint's emerging and wholesale business group, which contributed more than $1.5 billion to Sprint's bottom line in 2013. Although Freitag was new to Sprint, she wasn't new to wireless. Prior to joining Sprint she worked as vice president of sales for Ericsson and Sprint was her client. Before that she spent several years at Nortel.
Freitag recently talked with FierceWireless Editor in Chief Sue Marek about Sprint's thriving MVNO business as well as the growing opportunity it sees in M2M. This is an edited transcript of that interview:
FierceWireless: You've been with Sprint just a little over a year. Before that, your career history was primarily with the vendor community, working with Ericsson and before that Nortel Networks. Why did you switch to the operator side of the business? And what's different about working for an operator vs. a vendor?
Freitag: I find a lot of things in careers are serendipitous. I wasn't necessarily looking to switch from a vendor to a carrier. A lot of this was about the opportunity. I had a great career with Ericsson and Nortel. But this came up and it was interesting because it was about leading a large organization and doing something a little bit different.
On the vendor side you have your piece of the solution, but you don't always see the whole end-to-end infrastructure. That was what was intriguing about the carrier side. You see the end-to-end solution and you provide the solution, not pieces of it.
Both have their challenges. But this has been a lot of fun. I was attracted to the job. I was hired by Matt Carter to run the wholesale group and six months later, he asked me to pick up the international/enterprise team and a few months after that I picked up the M2M business. So the opportunity has been growing.
I knew many of the Sprint executives for many years. But I had not met Matt [Carter] before. But I found him to be an amazing leader. He pushes people hard. The opportunity to take an organization that had a good business but needed a new vision for the future was appealing. What are the challenges we will see in the industry and how do we adapt?
That's easier said than done. Bringing in an outside perspective has been good and it's been fun to figure out what we are doing well, where we can push and change and how we prepare for the future. How do we adapt and change and set direction in this industry? That's what we are focused on.
FierceWireless: You oversee a lot of areas. Is there one area that you see as being the star, or has the biggest growth potential right now?
Freitag: My business includes wireline and wireless and wireless is definitely the king. The wholesale and MVNO business has a lot of growth potential. This is surprising because you think everyone has a cell phone. But MVNOs are not just companies putting together prepaid plans. Many are serving a niche market. We have Credo, which is "cause" based and their user base is very loyal. They attract them because of their community involvement and the causes they support. They take a portion of their proceeds and donate it.
But a lot of MVNOs are going to embed data into a laptop. When they sell their laptops you get 200 MB of data. There is a lot of growth in the MVNO business.
And M2M and connected devices is another area of growth. But if you had to say one over the other, M2M is where there is exponential growth because of the volume. Some are low usage, some are very high usage and we can service all of them.
From a revenue standpoint, it's MVNO. From a connections standpoint, it's M2M. From an end-to-end value creation, you are looking at connected vehicle and our Velocity program.
FierceWireless: Does Sprint have a disadvantage in M2M because a lot of connections are 2G and 3G and Sprint is CDMA on the 3G side. Is that more challenging?
Freitag: We have a growth rate that is slightly better than market growth rate. We are doing very well. We have 2G, 3G and LTE solutions. That helps us a lot. We have M2M apps that are low usage to high usage apps like video.
We look at being network agnostic. We are committed to network choice. A customer can select 2G, 3G or 4G or all three.
One of our competitors is getting out of 2G and we see a lot of activity from that. We expect to keep our 2G capability for the long term. That is helping us as well.
FierceWireless: What about international roaming? GSM operators can roam internationally much easier than CDMA operators.
Freitag: We can still roam. It comes down to cost more than anything. It's more challenging if you have a CDMA network. Many of our devices have CDMA chips as well as GSM chips. But GSM is a more global standard. It's a little easier from a technology standpoint but from a business standpoint we differentiate by being flexible and agile and easy to do business with.
FierceWireless: On the MVNO side, you are known for being a very accommodating partner. Sprint has been involved with MVNOs for a long time. But we are seeing a lot of different types of MVNOs, even some in the Wi-Fi area that are Wi-Fi first and cellular second. Are there MVNO projects that you see that you don't like?
Freitag: We look at them all individually. We are looking for cohesiveness. Is it compatible with what we are trying to do?
One thing that is important to note is, from a wholesale prospective, most of my competitors are trying to monetize excess capacity. We look at it as strategic. That's why we have had success. We are committed to it. We have been willing to wholesale 4G as long as we have had it. If the economics make sense for us and for the MVNO. There have been rare instances where competitors have wholesaled 4G, but we have been committed to it.
From that approach we look at how they [the MVNOs] are funded and their business model. Will they be successful? It costs them money to launch an MVNO and it costs us, from a resources standpoint. We want someone who is well funded and will be successful.
There is nothing categorically that I would say we are not interested in. We look at them individually. We look for those that want to differentiate. Those that just want to offer a new rate plan is not that interesting.
But a lot of projects are looking at loyalty programs. That's interesting. Lifeline is interesting but also challenging. Not all Lifeline providers are created the same. So we look at the ones that can adhere to the government requirements and still be successful.
We also look at the electronics manufacturers who embed connectivity in their devices.
That's what makes us successful. We are not enabling people that will steal from each other. They fill a niche where Sprint as a whole is under-indexed and fill those gaps. Those are complimentary.
FierceWireless: Are you worried about the network being constrained?
Freitag: We have forecast what our MVNO traffic is going to be. Our MVNOs may offer unlimited plans but their plans with us are not unlimited. They pay us for any network usage. They have a business model that works for them. We monitor network traffic and plan it and build for it. That's one thing we do with the MVNOs. We understand what they are doing and if they are going to drive volume. It's very important for us to stay close to them. That is part of our success story.
FierceWireless: In general, in the telecom industry women are not well represented in leadership positions. How did you end up in telecom? Were you mentored by someone?
Freitag: Yes, I agree with you. Every company I've worked for has been focused on diversity and is looking for ways to drive diversity in leadership. However, it is a challenge.
I always wanted to be in sales and went directly to IBM from college. They would hire you and test you and put you in a position. IBM put me in the engineering department in sales. I was surprised and didn't really want to be in technical sales. But my Dad encouraged me to stay. And I'm glad I did.
I needed a job and I needed to work. It worked out well for me. I didn't dream to be in technical sales but it ended up being very good for me because understanding the technical side of the business helped me a lot in my career. And it gave me credibility. I love this industry and I wish there were more women in it.
It's one thing to have a mentor who has wisdom but they aren't necessarily invested in your success. I tell people that work for me to look for someone who will be your sponsor. Someone who will look out for you.
I always try to look for diversity in my organization. I don't just mean diversity of race or sex but diversity of experiences. I try to drive that within my organization.