Subscriber Trends Continue to Batter Sprint

Jan 30, 09:57 AM

Jan. 30--Sprint Nextel Corp. is losing subscribers much like the way a kid forks over lunch money to bullies on a schoolyard playground.

Three of the wireless industry's top four carriers added a total of 5.65 million subscribers in the final three months of the year, according to a tally that emerged Tuesday. Sprint, as the company reported earlier this month, lost 109,000 subscribers in the fourth quarter.

During all of 2007, when AT&T, Verizon Wireless and T-MobileUSA added a total of 17.7 million subscribers, Sprint added only 772,000. When counting only customers on monthly calling contracts, Sprint lost 1.2 million subscribers during the year.

Much of the problem centers on Sprint's struggles to counter a reputation for providing inferior customer service. It was cited as the "bottom-ranked of the carriers we rate" in the most recent Consumer Reports guide to cell-phone service.

T-Mobile, Verizon Wireless and other carriers regularly say that when they lure subscribers away from rivals, they most often come from Sprint, according to a series of recent reports from Robert W. Baird & Co.

"The biggest question for the industry right now could be Sprint's potential competitive response to retake market share," William Power, a Baird analyst, stated in a report to investors Tuesday.

Dan Hesse, Sprint's newly installed chief executive officer, has arrived with promises the company will satisfy subscribers far more often.

"The first thing we need to do is really focus on customer service and simplicity," Hesse said in December on the day he was named Sprint's CEO. "We need to re-engage with our customers around customer service."

Hesse comes with a reputation for making bold moves.

When he previously guided the AT&T wireless business, for example, he launched an industry-changing flat-rate pricing scheme known as AT&T Digital One Rate.

"There has been increasing speculation that Sprint could consider a nationwide unlimited calling plan," Power said.

Sprint already is gaining some traction with a trial "Unlimited by Boost" service that offers customers in select areas unlimited local and long-distance calls for a flat charge of $45 to $55. Leap Wireless and MetroPCS Communications are two new entrants seeking a niche in the wireless business with their own fixed-rate plans.

Established companies in other industries, however, often have found it tough to fight off newcomers winning customer loyalty with low prices. Lumbering rivals, for example, tried to match the low fares of fast-growing Southwest Airlines but found profits elusive because they did not enjoy the lower expenses of the scrappy carrier.

A more expansive rollout of Sprint's flat-rate pricing could confront a similar challenge.

Another major move Hesse is considering involves Sprint's rollout of a new nationwide high-speed wireless network. Services relying on the WiMax technology could give Sprint a competitive edge, though investors have balked at the cost.

Sprint scrapped plans with high-tech startup Clearwire Corp. last year that would have shared the risk and cost of the multibillion-dollar project.

Talks between the two companies reportedly have been revived. Sprint and Clearwire now are discussing the formation of a joint venture and bringing in outside funding, possibly from companies such as Intel Corp., Google Inc. or Best Buy Co., according to a report late Tuesday on the Web site of the Wall Street Journal.

Becky Wilson has seen the wireless industry trends from a different vantage point and is concerned about how consumers are faring. She's had service from multiple companies over the years and found that problems aren't confined solely to Sprint.

Wilson, president of WDS Marketing and Public Relations in Overland Park, was ready to upgrade the cell-phone service for her business when she received a call recently from a Sprint salesman.

"He was absolutely wonderful," Wilson said. "You always hear about Sprint not having good customer service, but this gentleman was excellent."

The salesman helped her select a good calling plan and the right phones. He also promised to help Wilson configure the phones as soon as she received them.

Then she received a call about a week ago from the salesman, who said he couldn't help her because his Lenexa office with about 60 Sprint workers was closing.

Earlier this month, Sprint announced a streamlining initiative that involved 4,000 job cuts and the elimination of at least 1,600 contractor positions. The changes to the Lenexa office involved an internal shift separate from the streamlining plan, according to a Sprint spokeswoman.

When left to call a toll-free number to set up her new phones, Wilson said she was passed from clerk to clerk. Some could not find her information in the computer system.

Wilson said she, and her clients, never would tolerate it if her business mishandled such basic customer service tasks.

"Every company, large or small, should have outstanding customer service," Wilson said. "Successful businesses are the ones that understand how to offer wonderful customer service. Unfortunately large companies have a challenge doing that."

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