Sprinting Where?

Peter : On Rad's Radar?
Peter
| Peter Radizeski of RAD-INFO, Inc. talking telecom, Cloud, VoIP, CLEC, and The Channel.

Sprinting Where?

Rumor has it that Qwest is talking to VZW to replace Sprint. Is this just a play to make Sprint negotiate? Or is this just another sign that Sprint's troubles have become unmanageable? Yesterday, Sprint announced that it would take a $29.5B write down for Nextel. It bought Nextel in 2004 for $35.2B (Sprint made the offer on 12/15/04). So Sprint basically wasted the entire purchase.

Hesse also announced yesterday that it would lose another million wireless customers. Hesse must feel like a real estate investor in Florida. Nothing is at it seems, but then I think Hesse is just a cost cutter. Will he have any REAL ideas to turn Sprint around? Sprint's market cap this morning is $23B. It wrote off more than it is worth? How upside down is that? But at least he decided to come clean to Wall Street. Yet he did not offer a turn around plan to go with the bad news. (Extra point: Alltel went private for $24.7B last November.)

While Sprint hemorrages customers, the other 3 players all moved to unlimited price plans. Sprint follows suit with an all-you-can-eat-everything-we-got plan for $100 (see Gary's article here)

One the one hand, it should stop the bleeding. On the other hand, if the network and customer service are so bad, how will they support this package? (How will current subscribers move to this price plan without pain and headaches? And will they be frustrated by a network not up to the challenge of all you can eat? Presumably, that is why Qwest is shopping, right? It wants either a better network or a better deal. But MVNO is not an easy game. It's worse than UNE-P. With UNE-P, the landline resellers knew what the going rate was (via tariffs). They negotiated low wholesale rates (too low according to the RBOCs who fought to end this). Then sold the landlines below RBOC rates. It worked to a degree, since at one time their were quite a few CLEC's with 500,000 lines each (Z-Tel, STS, Birch). But today that wholesale game is more difficult as the margins are tiny - whether it is landline or cellular.

It would be interesting to see what Hesse does next. If he wants a suggestion, I would say spend a week talking to some of the best marketing gurus you can find, like Seth Godin and Jack Trout. Develop a Purple Cow. That's the only way Sprint will come back from this. (Seems like thier fiber network is almost forgotten these days).



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