October 30, 2013

Sprint (Once Again) Promises the Telecommunications Moon


Sprint's unspoken corporate mantra seems to be "We'll be better tomorrow." Its latest marketing pitch is Sprint Spark, an LTE service promising 50 to 60 Mbps peak speeds today with the throw-away line that it is "technically feasible" to deliver my than 2 Gbps "per sector." Does anyone at Sprint realize people want things that work today?

In an October 30 announcement, Sprint says it plans to deploy the service in about 100 of America's largest cities during the next three years, with initial (and limited) availability in New York, Los Angeles, Chicago, Tampa and Miami. Vanilla 4G LTE service will be available by mid-2014 to around 250 million Americans with 100 million having Spark "or 2.5GHz" coverage by the end of 2014.

As part of its media blitz, Sprint did a lab demo of 1 Gbps wireless speeds. Because, of course, there's no way in the real world you'll see anything close to 1 Gbps wireless in the U.S. anytime in the next five years.

I am, of course, deeply, deeply skeptical. This is the Sprint that promised WiMAX coverage across the U.S. not so long ago, an HD voice "launch" that turned out to be a phone promotion more than a real rollout in the spring of 2012 and the only carrier that had to say its Apple iPhone 5 version didn't support its 3G version of HD voice upon product launch.

Ironically, Sprint spliced in a paragraph about its 3G HD voice deployment to fatten up its press release for Spark. The carrier claims its HD voice offering "reaches" about 85 million people -- in other words, upgraded cell and maybe network equipment -- today with the expectation to cover 250 million people by mid-2014. If this was a release in the cable industry, you'd use the phrase "homes passed" to indicate people COULD get it, not that they actually HAD the service.

More truthfully, Sprint "expects" 12 million HD voice devices in the customer base by the end of 2013, growing to 20 million by the end of 2014. But that's not the full story, either. Sprint is the only U.S. carrier implementing HD voice over its 3G network, using Qualcomm's 1X Advanced technology, so it is going to have some interesting transcoding and HD voice interoperability issues when it lights up Voice over LTE (VoLTE) sometime in the future and starts to interconnect HD voice calls with other carriers already using the AMR-WB HD voice mobile standard around the world.

Sprint's bigger problem is that it continues to lose customers. It lost a net total of 313,000 customers last quarter, including 360,000 contract customers. It still has 54.8 million customers, but its churn rate has creeped up to 1.99 percent, up from 1.89 percent a year ago. 

From a market perspective, Sprint is getting squeezed from the top and bottom. AT&T and Verizon provide better overall coverage and more reliable service by most accounts while T-Mobile US takes its junkyard dog attitude to bring in price-sensitive customers in both consumer and business. 

Parent Softbank is now in a position to provide both stability and cash to Sprint, but it may also have to shake up management and get some fresh perspective in the next twelve months.




Edited by Ryan Sartor



Related Tags

Wireless    Apple   
       

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