Former Sprint CEO Hesse: Unexpected disruption from Network Vision was 'very painful to me personally'

Former Sprint (NYSE: S) CEO Dan Hesse said he regrets causing so much disruption to Sprint customers' service as Sprint plowed through its Network Vision network modernization in 2013 and into 2014. However, he said despite the pain for customers, which was more than he had anticipated, Sprint's network upgrade laid the foundation for what will be a "spectacular" network.


"We knew it would be difficult, but it was even more difficult than any of us had anticipated," Hesse said in a recent interview with FierceWireless. "Unfortunately, there was no playbook. No wireless company in the world had done something so radical and so aggressive in order to build a great network at the end."

Hesse was replaced by Marcelo Claure as CEO of Sprint one year ago this week. Network Vision was one of Hesse's major initaitives at Sprint -- the program aimed to transition customers from Sprint's WiMAX network to its new LTE, while shuttering its iDEN network and maintaining and improving its CDMA network.

Hesse said 2013 to 2014 was particularly difficult. During all of 2013 and the first two quarters of 2014, Sprint lost slightly more than 3 million customers. Many of those were Nextel customers (the iDEN network was shut off in mid-2013), but during that period Sprint also lost 361,000 net customers on its "Sprint platform" of CDMA and LTE networks. "Ripping out of the network degraded the customer experience more than we, or our vendors, suppliers, consultants, anyone envisioned," Hesse said.

Given the fact that Sprint had three different networks (when including Clearwire's WiMAX network) and three different air interfaces, Hesse said he did not think Sprint had any other choice but to rip out and replace its network.

"But the implementation plan of getting to that long-term gain was more short-term pain than any of us had envisioned," he said. "And I don't know if we could have found a better way of doing it. I don't know that. But had we known there would be that level of pain in '13 and '14, we probably would have taken time to try to perhaps see if there other ways of getting to the ultimate Network Vision build plan. And I don't know if there is another answer. But the level of pain was unexpected."

In May 2013 Sprint said poor execution by its network vendor partners in the latter part of 2012 was part of what caused it to delay LTE deployments and the larger Network Vision project. Alcatel-Lucent (NASDAQ: ALU), Ericsson (NASDAQ:ERIC) and Samsung were Sprint's main Network Vision vendors.

Hesse said Sprint knew there would be disruptions, but said the service disruptions were larger than expected.

"And it was particularly difficult for us because we had such a service ethic and customer experience ethic at Sprint," he said. "That's how we had gotten to the No. 1 position. It had been something we walked and lived and breathed 24/7. And then all of a sudden to be providing something less than excellent customer service, and doing it over a long period of time, was very painful to me personally and to the organization."

Hesse did secure the deal with SoftBank to take control of Sprint in a $21.6 billion deal. And he said that ultimately, he thinks Network Vision will be a positive development for Sprint. "When they are finished, that network will be spectacular," he said.

"I believe in the long term Network Vision will be a success and will put Sprint in a great position," he said. "We'll call it short-term pain and long-term gain. In my view, long-term gain will be there."

This week, Sprint turned the page in some ways on the Hesse era, announcing it would replace CFO Joe Euteneuer, one of Hesse's longtime lieutenants, with former Telstra and Orange executive Tarek Robbiati. Virtually all of the senior executives at Sprint who served under Hesse are no longer with the company.

But Hesse also pointed to some high points during his time as CEO. He said the company managed to avert bankruptcy following its disasterous acquisition of Nextel, a deal inked under former CEO Gary Forsee, and that Sprint improved its customer satisfaction numbers.

"We became much stronger financially and we moved from last place in customer satisfaction and net promoter score and improved all those metrics dramatically, achieving the No. 1 position in customer satisfaction at one point, and receiving 20 awards from J.D. Power & Associates," Hesse said. Indeed, in May 2012 the American Customer Satisfaction Index named Sprint the top U.S. carrier in terms of customer satisfaction, nudging just ahead of Verizon Wireless (NYSE: VZ) with a score of 71 on a 100-point scale. Sprint's score at the time represented a dramatic improvement from 2008, when it had an all-time-low score of 56.

Hesse left Sprint last year shortly after SoftBank CEO and Sprint Chairman Masayoshi Son concluded that regulators would block a planned merger between Sprint and T-Mobile US (NYSE:TMUS). Son said on Sprint's earnings conference call yesterday that he lost confidence in the U.S. market after that, but also said that he has been "totally refocused" the last few months to help Claure and his team on the turnaround.

"I believe that a year ago perhaps the timing just wasn't right yet," Hesse said of the merger. "And I do believe that it is in the best interest of American consumers and the U.S. wireless industry long-term that consolidation not including the top two [Verizon and AT&T] be allowed. I still believe it's possible to see further consolidation in the U.S. wireless industry. And it's an issue of timing and administrations."

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