Sprint's Hesse says there is no plan to attack wired broadband market in near-term

Sprint (NYSE: S) CEO Dan Hesse said he does not see the carrier going head-to-head in the near-term with the likes of Comcast (NASDAQ: CMCSA), Verizon Communications (NYSE: VZ) and AT&T (NYSE: T) in the market for wired home broadband Internet access. Hesse's comments, made during a Sprint meeting with industry analysts and relayed by an analyst, stand in contrast to the long-term vision of Sprint Chairman and SoftBank CEO Masayoshi Son, who has said Sprint could eventually compete in and shake up the wired broadband market in the U.S.

According to Jackdaw Research analyst Jan Dawson, Hesse said Wednesday at Sprint's annual meeting with industry analysts that Sprint isn't planning to go after the home broadband market actively, and that it would be difficult to make money in that market, especially given how much video wired broadband customers tend to use. AT&T, for instance has said its average, non-U-verse broadband customers use around 21 GB of data per month; overall average monthly usage on North American fixed access networks was 51.4 GB, according to a May study from network vendor Sandvine. Those numbers are much bigger than the average monthly data consumption by wireless phone users.

Son said in March he aims to deliver wireless downlink speeds of 200 Mbps and lower prices to U.S. consumers via Sprint to inject more competition in the wired and wireless broadband market.

Dawson said he asked Hesse a question about Sprint's plans for targeting the wired broadband market in the context of Son's statements about shaking up the wired broadband market, which Son has said Sprint can do with more investment and scale. Competition, Son has said, may bring a "real fight" to increase speeds and lower prices.

"Dan was speaking to Sprint's short-term focus--completing our 3G and voice network rip and replace, rolling out our 4G LTE network, launching Sprint Spark, expanding the Framily platform and growing EBITDA--and how they fit with our spectrum and other assets/resources," Sprint spokesman Scott Sloat told FierceWireless. "Masa's remarks have been in the context of his long-term vision."

Dawson affirmed that view, and said that Sprint is simply focused on other business priorities right now and does not plan to aggressively compete in the home broadband market. He said that such a plan is "not on the roadmap" right now but could be somewhere down the line as the carrier expands its Spark service and increases speeds. For now though, Dawson said, Hesse was acknowledging that Sprint's spectrum position and the realities of deploying Spark make it infeasible to actually enact Son's vision.

"The difference is between the strategic vision Masa Son is laying and the operational reality of running the Sprint business today with the spectrum holdings they have," he said.

BTIG analyst Walter Piecyk wrote in a blog post that "the apparent contradiction between Hesse and Son seems odd but not necessarily within the context of recent press reports that indicate that T-Mobile might be the management team that is put in place in the event of a merger attempt by the two companies. In fact, Masa Son spoke kindly of T-Mobile CEO John Legere at the recent Re/code conference without even mentioning his own CEO Dan Hesse and Hesse was not present at Masa's presentation to the Chamber of Commerce in March."

Recent reports have indicated Sprint and T-Mobile US (NYSE:TMUS) are moving toward a $32 billion merger. Son and Hesse have said that Sprint and competition in general would benefit from the company achieving larger scale. Piecyk asked T-Mobile CEO John Legere on Twitter whether T-Mobile could attack the home broadband market with LTE and more spectrum, and Legere replied, "never say never."

Piecyk told FierceWireless that there is "no context in which [Hesse's] comments are defendable in light of what the chairman of the company has said." He noted that the FCC and the Department of Justice have sent clear signals discouraging a transaction, but he thinks Sprint and T-Mobile have a strong case to make to regulators "given that AT&T and Verizon dominate the industry's profits and spend significantly more" than Sprint and T-Mobile do on capital expenditures.

Without consolidation and scale, it could be difficult for Sprint and T-Mobile to expand their networks into more suburban and rural markets, Piecyk said. Given the rumors of a Sprint/T-Mobile deal, whatever Hesse says in the context if broadband deployment is going to receive "a lot of focus," Piecyk added. Given that, Piecyk said he is puzzled why Hesse's comments seemed out of step with Son's vision.

For more:
- see this BTIG blog post (reg. req.)
- see these two separate Twitter posts from Jan Dawson

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