Wi-Fi

Sprint's wireless woes may derail WiMAX

Sprint Nextel announced plans to lay off 4,000 workers, close 125 company-owned stores, and sever relations with 4,000 resellers. This news comes after losing 1.2 million subscribers in 2007.

Sprint Nextel announced plans to lay off 4,000 workers, close 125 company-owned stores, and sever relations with 4,000 resellers. This news comes after losing 1.2 million subscribers in 2007.

From Bloomberg:

The subscriber slump brings defections to 1.2 million in 2007, forcing Chief Executive Officer Daniel Hesse to get rid of about one-fifth of Sprint's retail locations. Hesse replaced Gary Forsee in December, taking charge of a company that has struggled to absorb the $36 billion purchase of Nextel in 2005 and offer phones to compete with Apple Inc.'s iPhone, sold by AT&T Inc.

"They've dug themselves a much deeper hole to climb out of,'' said Nelson, who is based in New York and advises investors to hang onto the shares.

Sprint, based in Reston, Virginia, fell $3.01 to $8.56 at 12:27 p.m. in New York Stock Exchange composite trading. Larger rivals AT&T and Verizon Communications Inc., the co-owner of Verizon Wireless, also each fell as much as 5 percent.

This action is expected to save the company $700 million to $800 million a year.

It is speculated that Sprint's shares will hit a five-year low when trading opens on Monday. Sprint is due to deliver its Q4 results on Feb 28, 2008.

So, what happens to WiMAX in all this?

From MRT:

Regardless of Wall Street’s reaction, wireless industry consultant Andrew Seybold questioned the benefit of layoffs to Sprint Nextel. Even with its current headcount, the carrier is struggling to maintain its CDMA and iDEN networks while tackling two other major initiatives—the nationwide rebanding of 800 MHz spectrum and the initial deployments of WiMAX networks on 2.5 GHz spectrum.

“They took on too much … I think they’ve got to get back to basics,” Seybold said. “I’m not sure that layoffs or anything helps until they get back to basics and their customers feel wanted again. They need to take care of business and stop the bleeding on the Nextel network.”

Seybold said he believes Sprint Nextel’s total costs associated with 800 MHz rebanding will significantly exceed the $2.8 billion the company was required to make available for the endeavor. Meanwhile, Seybold indicated the carrier may only deploy WiMAX enough to satisfy FCC buildout requirements to let the company keep its considerable 2.5 GHz spectrum.

It will be interesting to see what the next move will be. While the initial costs are high for WiMAX, the rewards could be great. Or do you agree that it’s time for Sprint to abandon innovation, at least for the moment, and get back to taking care of business?

10 comments
art
art

I've been with Sprint since digital wireless first came to Philadelphia in the mid-'90s. In this geographic area, they have always had the best pricing/coverage mix, along with the best call clarity. Verizon had better coverage, but at double the price. T-Mobile, the best pricing, but unacceptably poor coverage. Cingular/ATT was reasonably priced with decent coverage, but the call quality was not as good, and the pricing always higher than expected. That is, with an 800 minute plan, over a period of 6 months, I never went over with Sprint, but always went over with Cingular. So I stuck with Sprint. Throughout that time, Sprint's customer service has been horrible. In the beginning when most transactions took place at the stores, the lines were typically an hour long wait. Then they moved much of their call centers to south Asia and they typical programmed, unresponsive service that typifies those operations. So in my experience, customer service has always been lousy, but I stuck with them because they had the best coverage for the money. That said, I understand that different geographic markets may be different in that regard.

vince
vince

Every time I went to a Sprint store I was treated like I was some wretch trying to screw Sprint. Instead of listening I was told no no no. I had to replace the treo 650 a couple times and was tired of them replacing them with used crappy phones. I saw their customer service people at the stores treating people like crap. So even though they cost less and their data network was faster I switched. I set up a lot of PDA's in my office for agents and I have found their competitors to be very friendly and their customer service was a leap above Sprint's.

Tig2
Tig2

It will be interesting to see what the next move will be. While the initial costs are high for WiMAX, the rewards could be great. Or do you agree that it?s time for Sprint to abandon innovation, at least for the moment, and get back to taking care of business?

fredscomprepair
fredscomprepair

Goodness, Please do not abandon innovation. I use the sprint network quit a bit for my mobile needs out in the field. Alot of people are still using dail-up, and for my Quickbooks to work i need faster speed and the Sierra Wireless Card does the trick. Sprint Ahead WiMAX.

stravos
stravos

I belive wimax will definatly be the wave of the future... but sprint really needs to sit back and take stock of what they are doing.. last year they lost customers, not because they are a bad network..but because they abandoned their customer service... when you cancel accounts becaue of "too many questions" and "problem acocunts" people get grumpy... and asside from that.. it was highly publicized.. that in and of its self hurt sprint more in my opinion than working on wimax.. or anything else.. Wimax is good.. and can pull them out of the slump.. but it will NOT do them any good if they alienate all their customer base and no one adops it...

la mere
la mere

I agree. I have been with Sprint since 2000, and I have watched their customer service degrade to the point where I am waiting for my contract to expire to go to someone else. Closing all of their stores won't help them if they don't work on customer service. I got great service on the home user side, but when I switched my accounts to their business side I had problem after problem.

rwidegren
rwidegren

At my company, the IT department has the pleasure of handling about 300 Nextel phones. You guys think that the Sprint/Nextel merger hurt the quality of customer service at Sprint, that's nothing compared to what happened to the customer service at Nextel. Customer service at Sprint may have been going downhill for years, at Nextel it fell of a cliff when they merged.

la mere
la mere

It was two years ago when I switched from home user to business user, so I guess it was long enough to give them time to go downhill. The reason I haven't left yet is because I have no problems with their wireless service, but when they get the billing wrong nine months in a row, and it takes me at a minimum an hour to deal with them each time, is it worth it?

vince
vince

I did notice that when they merged with Nextel Customer service plunged. I would rather be treated well in a shitty environment than be a third class citizen in paradise.

Tig2
Tig2

There has been a lot of speculation that there was a specific point that Sprint's customer service went down hill. I have heard it said that the Nextel merger was the beginning of the end. Did your move from home user to business user coincide with that merger? As well, I agree that publicly telling your customers to seek another service provider is a bad move. You may get rid of a problematic customer that way but it is a good bet that you will lose good customers also.

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