The Sprint nightmare is far from over
The news for Sprint Nextel just keeps getting worse as the company struggles to rebuild its business and its reputation.
On Thursday the third-largest wireless phone company in the U.S. announced a $29.5 billion loss for the fourth quarter of 2007 and warned that the company would continue to lose customers at an alarming rate in the coming year.
The company eliminated its dividend and wrote down the full value of its $35 billion merger with Nextel Communications. The companies merged in 2005, and it's been a bumpy ride ever since with many of Nextel's customers complaining of poor service. Sprint also said that it had to borrow some $2.5 billion just to get access to cash.
For several quarters Sprint has been plagued by massive customer defections. And on Thursday it reported it had lost 683,000 customers in the fourth quarter. Company executives said Sprint Nextel will likely lose another 1.2 million post-paid customers in the first quarter of 2008. Post-paid customers are customers who pay a monthly bill. And they are often considered highly coveted in the wireless market.
Dan Hesse, president and CEO, Sprint
(Credit: Sprint Nextel)Meanwhile, Sprint rivals Verizon Wireless, AT&T and T-Mobile gained subscribers in the fourth quarter. In fact, T-Mobile, which has the smallest network footprint of the four major carriers and does not yet have a high-speed 3G network fully deployed, added 951,000 subscribers in the fourth quarter, the company said Thursday.
The main problems for Sprint right now are poor customer service and a severely damaged reputation, issues the company's management readily acknowledges.
"The level of customer defection on the iDEN network is unacceptable," Dan Hesse, Sprint's newly appointed CEO, said during the conference call with analysts and investors. "We need to rebuild the Sprint brand. And the most important way to do that is delivering a good customer experience. We have not done this, but improving that experience is job one."
Despite Hesse's assurances that the company is committed to fixing its problems, he acknowledged that it will take several quarters after changes have been implemented before they are reflected in the market. And he admitted that the issues facing the company in the coming year are "more challenging than I had expected."
"We haven't provided the right customer experience," he said. "But financial performance won't improve overnight."
The first priority for Sprint is reducing the churn rate--the rate at which customers leave the service--Hesse said. Doing this will require the company to not only invest in improving customer service, but will also require the company to simplify its business practices.
For example, he said, by simplifying pricing customers will have a better sense of what they are buying. And it will also help the company's sales representatives do a better job of selling and servicing those customers. Ultimately this should lead to more customer satisfaction and fewer calls to customer support.
A two-network strategy
Moving forward, Hesse emphasized that keeping current customers on the Sprint Nextel network is the priority. As part of this effort, Sprint is changing course slightly in how it plans to handle migrating customers from the old Nextel network, which uses the iDEN technology, to Sprint's CDMA network.
Previously, the company had been trying to move customers away from iDEN, but Hesse seems to be embracing that technology and network.
"Each network has unique strengths," he said. "And having two platforms is better than having one."
He said the company plans to use the capacity and resources of its existing iDEN network more efficiently. And it plans to increase the synergies between the two networks, including sharing more cell sites, creating rate plans that allow customers to choose either iDEN or CDMA services based on the criterion that is most meaningful to them, whether that's network coverage or network speed. And the company plans to roll out its QChat service, which allows users to use push to talk on the Sprint's CDMA-based 3G network as well as on the iDEN network, in 20 markets in 2008.
"It is the right decision from a short-term and long-term financial perspective to continue to maintain both networks and both platforms and to find synergies between platforms," Hesse said.
Hesse also said that the company needs to improve its brand image by not only improving its customer support and service, but also by emphasizing innovative services. A big part of this is emphasizing Sprint's data services. Hesse announced during the call that Sprint will launch a $99.99 plan that includes unlimited voice as well as unlimited data services and some premium services. The point of this, he said, was not to match its competitors on price, but to give customers a simpler plan centered around data services.
About Xohm
Even though Hesse emphasized the company's need to focus on its core business, he indicated that Sprint must also look forward to the next generation of technology. And he indicated that Sprint is moving forward with its WiMax network, called Xohm. Previously, there had been some speculation that Sprint might abandon its WiMax efforts.
"Leave no doubt that the first priority is our core business," he said. "But Sprint has an enormous asset in the 100Mhz of spectrum (that is being used to build Xohm), and we have a three-year head start with Xohm."
While Hesse said that he sees Xohm as a strategic asset, he was not willing to give further details about any deals or arrangements the company might be negotiating with Clearwire. Last summer the companies announced they'd be working together to build a nationwide network. And in November they terminated their agreement. But each company has said separately that is talking to other about ways to work together. Rumors have floated around for the past month that Sprint might spin off Xohm and combine it with Clearwire.
Hesse said he could not comment on any press reports or rumors. He said he'd provide more information on the WiMax network during the first-quarter conference call.
Hesse, who took over the CEO job in December, has also already made some moves to cut costs. In the two months he has been on the job, he has cut 4,000 jobs and eliminated 125 Sprint retail stores. He also consolidated the company's headquarters in Overland Park, Kansas, moving executives from Nextel's historic headquarters in Reston, Va. He also booted three top executives--the chief financial officer, the chief marketing officer, and the president of sales and distribution.
During the question-and-answer portion of the conference call, one analyst said that he was pleased with Hesse's actions, stating, "This is exactly what we had been looking for from you."
Indeed, Sprint seems to have a good plan in place to get itself back on track. The big question now is whether or not the company will be able to execute on those plans. And it remains to be seen how willing its former customers will be to forget the past and go back to Sprint. With cell phone penetration in the U.S. over 85 percent, it's going to be more difficult even for the best wireless operators to add loads of new customers.
Marguerite Reardon has been a CNET News reporter since 2004, covering cell phone services, broadband, citywide Wi-Fi, the Net neutrality debate, as well as the ongoing consolidation of the phone companies. E-mail Maggie. 
to loose subscribers...
This should be a wake up call for ALL service providers of all services..... but you can bet
that someone, somewhere will still value profits well ahead of customer service.
I don't think they are mutually exclusive, but a balance must be found instead of being so
out of whack in favor of profits.
All I want is to continue with the old contract and port my numbers out in June without being hackled for $200 per line.
I am happy with my Sprint plan and pricing, especially the 7 to 7 free nights and weekends. The incoming quality of people on the other line is just fair, but outgoing quality (my voice to others) has been excellent and clear.
Also, in my experiences, from account setup to customer and technical support, Sprint service has been slick and super helpful. Maybe I've just been lucky. I've also had Alltel and AT&T/Cingular, and while their reception quality was better, their support was notably worse, in my opinion (particularly Alltel - seemed like I always got some totally green rep whom I actually had to guide, sometimes.)
My 2 biggest complaints with Nextel.
1. Bulky phones, would like something slim and sleek like other carriers. Just a phone, not interested in camera phone, mp3, etc. Just a phone.
2. Once your plan is set up, don't let a human help you or touch your account because it will get screwed up and take many calls and more human interaction to get it resolved.
I just noticed that they killed the service on my exisiting phone w/o telling me.
I will not hear or see "SPRINT" back in business. Why? Sprint
customer services has been a nightmare for my whole family.
Otherwise I will sue them the last penny they have.
They might have the smallest footprint, but their plans and add-ons are clearly laid out on their website, and they have the best deals on minutes. If I was a salesperson, I wouldn't get T-Mobile due to that small footprint, but for most people, I think their network meets their needs.
Sprint's plans were confusing and expensive, and their customer service was a tad bad at the end, just before I switched. Instead of laying out the plans based on minutes, they had convoluted ways of separating them into different packages, and that stupid add-on minutes thing was worse. Why in the world does a company need to offer 100 different plans? At that point, just offer services ala carte, separate from just a handful of standard plans.
unsolicited marketing cell phone calls which took 3-4 attempts to make them stop.
Incredibly poor and rude in-store customer service.
I asked technical questions which were received with anger -Can I tether this to my laptop? 'why would you want to do that?', (angry stare) then answered incorrectly 'No, you can't do that' (while looking down at his paperwork, shaking his head and rolling his eyes).
He had earlier looked me up in his system and angrily said, 'Oh, you're in here a lot, aren't you?', implying I was nuisance for looking at the new phones all the time and asking questions. This store is conveniently located next to my gym, so yes, I pop in whenever a new phone comes out, since my contract was expiring soon.
When the new Palm Centro came out, I went to the same store to check it out. Another sales man asked if I needed help, but that same other guy was standing behind the counter and was literally staring me down. I said 'Nope, no help needed here', then looked at the Centro on my own while the other guy is staring at me the whole time.
I left thinking, 'nice phone', but what a bunch of a-holes, and vowed to NEVER return to that store, and to leave Sprint for sure as soon as the right phone with another company came out.
I went to T-mobile to look at the Blackberry Curve, and the sales lady spent HALF AN HOUR just hanging out, showing me her two Blackberries and how they work, then CALLING HER TECH TEAM to answer a question she couldn't answer herself. When I left the store without buying anything, she thanked me for stopping in and said if I had any more questions, to definitely call her or come by again.
I'm still waiting to switch, but the time will come. (Probably a T-mobile Blackberry 3G or new Google phone later this year after it comes out and I visit that same T-mobile store again).
In the meantime I read articles like this for a year now about customers leaving Sprint, and Sprint saying, 'boy we need to improve customer service', 'boy, we are losing customers by the millions, we need to do something' Yeah, yeah, yeah, well you better walk the walk soon because you're right, you're going to lose millions more in the next year, me being one of them.
Sprint also needs to work on it's coverage. I used to work at Radioshack and customers would come in and want Sprint phones. Couldn't sell them to them unless they lived on the outskirts of town! We didn't want to have to deal with customers coming back complaining about spotty service. And the ironic part is the Sprint rep would get mad at us for doing this, but never wanted us to tell the truth.
It'll literally take a long time before I EVER trust Sprint again.
faith in the company for three years now. Sprint has great
coverage but has bad plans and poor customer service since
2003. I have three lines with them but i am fed up. As much as i
hate to say i am waiting to see if the fruit company (apple) could
support business level software such as Microsoft or iwork to go
on iphone in March and switch to AT&T. Yes, i am aware of the
EDGE but for what i do it will be just great. Sprint, stop charging
activation fee every time a phone is replaced. I already paid full
price for the darn thing. Sprint needs to get some one who
could help the customer as fast and in a reasonable time frame.
Anyways, Sprint get your acts together and bye and hello AT&T.
Sprint stores are another matter. Frequently, the people working there just don't care. I've had a 50/50 experience but one salesperson was yelling at me that I was wrong about their services and what was allowed, even though I was trying to buy a plan that I knew was already being used by others with the same phone.
I hope they settle things quickly because, for all the bad Sprint has, AT&T and Verizon are worse.
Their battery life is seriously like 12 hours. The batteries are huge. the software and graphics on their iDEN phones are **** poor and WAY--- overpriced. My Samsung A920 could do more than my i560 iDEN phone. Yet, the i560 cost me $200 Vs. the Samsung A920 which I got for $50...... Its amazing. Motorola came up with the RAZR and they own Nextel's iDEN technology--- and yet Motorola still wont make a RAZR phone for Nextel....
didnt work at her house or anywhere she went. When she called
Sprint customer service, the rep actually told her "Ma'am, we
don't guarantee that our phones will work indoors." When my
mom questioned the rep about the meaning of that statement,
the rep clarified what she meant, "You know, we don't claim that
the phone works in buildings." Hahahahaha. Luckily for my
mom, AT&T DOES have a phone that will work "in buildings",
and she's had trouble free service ever since.
PLUS I have had EXCELLENT store support - these people will do anything to make customers happy.
Steve Brown
them fixing their screw ups wich where from 150-600 every
month.
I had to yell and threaten them to cut off my service when the
contract was up.
Glad things went well for your but i think your the exception.
This companies CSR's and policy is sinking them and it makes me
smile.
- by thabassman July 24, 2008 12:45 PM PDT
- Sprint sucks so bad, there is no hope for them. ATT with the iphone, Verizon with the best network, tmobile with its cheap plans, and young support. Helio was bought by virgin mobile, attel was bought by verizon. Sprint is screwed.
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