Sprint (NYSE: S) CEO Marcelo Claure has a bold claim: that within two years, Sprint will have the top network among U.S. carriers.
Speaking yesterday at Re/code's Code Conference, Claure said that "you can expect in the next 18 to 24 months--hopefully you'll invite me two years from now--that our network will be ranked No. 1 or No. 2 in every single market." He later clarified that he meant No. 1 or 2 in the United States' major markets, according to CNET.
Claure acknowledged that when he took over from Dan Hesse last August, Sprint's network was in poor shape. "I've been in this job for eight months and when I came, you're absolutely right, our network was drop-dead last," he said. "We'd be foolish not to acknowledge that."
However, he said since then Sprint has continued to build out its tri-band Spark LTE service and improve and optimize its network. "We've put a relentless focus on getting our network better in the last eight months," he said.
Thanks to improvements Sprint made in fixing blocked calls and texting reliability, Sprint leapfrogged back over T-Mobile US (NYSE:TMUS) for third place in overall performance in network testing firm RootMetrics' report for the second half of 2014, which was released in February. In terms of performance in the top 125 metro areas, Sprint saw the biggest improvement, nabbing 135 metro awards in the second half of 2014 compared to just 27 in the first half of last year.
However, Sprint still had the slowest network and weakest data performance of the four Tier 1 U.S. carriers, according to RootMetrics.
Sprint executives have for years talked up the capability of Sprint's vast trove of 2.5 GHz spectrum, which it acquired from Clearwire. Sprint controls around 120 MHz of those airwaves in 90 of the top 100 markets, and has said a network running in the spectrum can produce peak speeds of 50-60 Mbps. Further, Sprint is starting to roll out two-carrier carrier aggregation in that band, which can produce peak speeds of more than 100 Mbps. Yet so far it has not rolled that technology out nationwide or provided much detail on the markets in which it is deploying the technology. "We are the operator with the largest spectrum holdings in the world," Claure said.
Sprint is embarking on a new "Next Generation Network" strategy to densify its network. The carrier has issued a request for proposal (RFP) for the network work, and is currently evaluating proposals from vendors. Although Claure and other Sprint executives have declined to reveal exactly how many small cells and macrocells Sprint is planning to add to its network, Claure has indicated that the carrier's long-term plan is to dramatically increase its coverage and capacity, and also to deploy Voice over LTE (VoLTE) technology. Sprint is also going to make Wi-Fi a key network element.
Claure was asked how Sprint can afford to make such network investments while at the same time offering promotions to cut the service bill in half of customers who switch from AT&T Mobility (NYSE:T) and Verizon Wireless (NYSE:VZ). Sprint also offers to pay off Early Termination Fees and equipment installment plan costs of customers who move to Sprint.
Claure noted that Sprint's parent company, SoftBank, supports the network enhancements. "We have a clear funding plan," Claure said, adding that SoftBank CEO Masayoshi Son "made a pretty strong commitment: I'm going to build a strong network."
Claure said conditions at Sprint were worse than he expected when he became CEO. Sprint was losing 12,000 customers per day and employees were demoralized, Claure said, according to USA Today. Now, Claure said, Sprint is on the mend. "The patient is doing well now, and I think the patient is in stable condition," he said, according to CNET.
During the first quarter Sprint added 1.2 million total customers, including 211,000 postpaid customers (though Sprint lost 201,000 postpaid phone customers). The carrier's postpaid churn fell sharply to 1.84 percent, down from 2.11 percent in the year-ago period and 2.3 percent in the fourth quarter.
Notably, Claure also indicated that Sprint might discontinue unlimited smartphone data plans at some point in the future (Sprint and T-Mobile are the only two Tier 1 carriers that still offer such plans to new customers). For now, Claure said, Sprint can still offer unlimited data and it works well for the carrier.
"Unlimited is not forever," Claure said, adding that increased usage of rich content like video will lead to more data consumption. "User consumption is below our cost of us producing data. But in the future we might increase the cost of unlimited or we might eliminate unlimited at one point in time."
"Today, our customers have a choice. You can be a moderate user or you can be an unlimited user," Claure said. "Obviously, if we're going to build a great network, in which you're going to have great video from all the different partners that we have, the unlimited equation doesn't work, but for now it works quite well."
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