See your link here
The end of Sprint?
9 comments- IT TOPICS:Emerging Technology, Mobile & Wireless, Networking
Does Gary Forsee's forced resignation as CEO of Sprint indicate the eventual end of the company? I believe the answer to that question could be yes if the board and shareholders have lost their nerve for the company's WiMax gamble.
Clearly, the board held Forsee accountable for Sprint's significant loss of cellular subscribers to its larger, more aggressive competitors, Verizon Wireless and AT&T. In addition, the board seems to be fearful that Sprint's attention to its core cellular business is being compromised by the mobile WiMax network it is building.
Those are understandable concerns, but here's how I see it: WiMax is the only way to save Sprint. The chances that the company will flourish in the cellular business in the long term are not high. If the board is short-sighted enough to take resources away from WiMax, it will hasten the company's demise or sale to one of its spectrum-hungry competitors.
Customer loyalty in the cellular industry rarely runs deep. Rather, it is largely based on word of mouth and Sprint's word of mouth has become woeful. It's hard to figure how Sprint can get its cellular subscribers back short of taking actions that are at least as risky as its WiMax venture. Simply offering cool new phones, which Sprint has done a poor job of lately, or launching a new ad campaign just won't do much to get back its lost credibility. AT&T and Verizon Wireless are strong, aggressive and smart enough to always stay a step ahead of Sprint.
If Sprint is serious about getting back in the cellular game, it will have to do something radical: Give customers what they want, such as flat-rate pricing for cellular service. Or significantly lowering the price on its EV-DO data service. Or providing a media service that is actually useful. In other words, it must differentiate itself by breaking ranks with its larger competitors, both of which are extremely resistant to taking such customer-friendly actions. Sprint's board of nervous nellies, however, seems to be a group of followers, not leaders, so they're unlikely to take such actions.
The real answer to the company's woes is WiMax. It is the only carrier with the spectrum to provide this service nationwide. Sprint's WiMax should be several times faster than existing 3G services and the company has said it will offer it for less money than 3G and without the obnoxious long-term commitments that the cellular industry loves but which provide absolutely no benefit to subscribers.
Even more important, Sprint's bigger, more powerful competitors are a minimum of two years behind it in terms of providing comparable service.
In other words, Sprint should have a hit on its hands if it doesn't lose its nerve. Sure, building a WiMax network is expensive and it will take a while to catch on. But given that Sprint has at least a two-year competitive advantage in WiMax and it doesn't have a huge chance of catching AT&T and Verizon in the cellular business, patience would seem to be the order of the day. However, patience is very much in short supply among its board and large shareholders.
I was chatting with Derek Kerton, a telecom consultant, the other day and he succinctly put his finger on the problem. He noted that Sprint is no longer the company the current shareholders invested in.
"Sprint is a startup now," Kerton said. "The shareholders are just going to have to get used to it." Unfortunately for Sprint's long-term viability, that's not the sort of thing that shareholders are likely to get used to.
Print
Email this
Digg this
