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Different quarter, same story: Sprint customers flee as network construction grinds on

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Sprint(s s) uttered a familiar refrain on Wednesday during its quarterly earnings call: The dust kicked up by Sprint’s ongoing network overhaul is causing more customers to flee, but everything will get better once its seemingly endless network upgrade is complete.

Sprint shed 334,000 mobile connections in the second quarter – Sprint’s fiscal first quarter – but if it wasn’t for its booming wholesale business those losses would have been far greater. About 530,000 subscribers joined Sprint’s networks thanks to partnerships with mobile virtual network operators like FreedomPop, Republic Wireless and Ting, who resell Sprint’s network capacity under their own brands.

Source: ShutterStock / Susan Cain
Source: ShutterStock / Susan Cain

Sprint recorded a net loss of 245,000 postpaid customers last quarter, and most surprisingly the loss of its prepaid subscribers continued to mount. Sprint suffered from 619,000 prepaid subscriber losses in the second quarter, compared to 364,000 departures in the first quarter. Prepaid used to be one of Sprint’s great strengths, driven by its well-known non-contract brands Virgin Mobile and Boost Mobile.

A big source of pressure is T-Mobile(s tmus), Sprint’s likely acquisition target. The country’s No. 4 carrier has become increasingly aggressive, and while the entire U.S. mobile industry has felt T-Mobile’s presssure, Sprint has been particularly hard hit as T-Mobile lures away its budget-minded customers.

Despite those customer losses, Sprint reported its first profit in years, recording a net income of $23 million. During the earnings call, CEO Dan Hesse said the carrier’s prospects are improving and he projected that Sprint would start growing its postpaid customer base again by the end of the year. Sprint now has 54.5 million total subscribers.

Sprint CEO Dan Hesse (Source: Sprint)
Sprint CEO Dan Hesse (Source: Sprint)

Sprint is still mired in its Network Vision upgrade, which is effectively replacing every Sprint cell site with new multi-standard base stations that will host all of Sprint’s various CDMA and LTE networks. The upgrade has been years in the making and is still far from completion. But at the end of the process, Sprint promises to have a 4G network that surpasses all others.

That network called Spark is already deployed in larval form in 27 cities, but over the next year Sprint will pile more spectrum onto the network and trick it out with cutting edge technologies like 8T8R (think a whole lot of antennas).

The problem is Sprint has been promising these kind of miracle networks for years. They always seem to be just around the corner, but they never really get fully built. Sprint now looks set to launch its formal acquisition for bid, and the ensuing year-long battle with regulators could very well put its grand network plans on hold again.

Hesse said the carrier is also looking to shake things up on the service side by exploring new pricing models. It has already launched its Framily program, which accrues collective discounts for its members, and it’s been testing shared data plans. On the prepaid side, Virgin today launched an innovative new pricing program called Virgin Mobile Custom, which allows customers to craft their smartphone plans to their exact use.

14 Responses to “Different quarter, same story: Sprint customers flee as network construction grinds on”

  1. Verizon and At&t are the best and for at least a couple years nobody can match their coverage and quality. Sprint and Tmobile will always be budget carriers. At&t and Verizon will be for the people that want the best service and dont care about prices. Verizon and At&t spend the most money on their networks thats why they will always be better then Sprint and Tmobile.

  2. Jonathan Fong

    let’s get the facts straight:
    Sprint Announced Network Vision and LTE in 2010, and began pilot deployment in 2011 (which soon became Q4 2011, almost a year later than announced (!!!)).
    Today is 2014, and Sprint still does not have a winning LTE or multi-layered network as promised. A quick look at root metrics’ website bears out their sub-standard data and network quality as I can attest as I travel a great deal for work with Sprint and Tmobile as work and personal cells. In Urban areas, T-mobile beats Sprint hands down, however in rural areas, Sprint has an edge with better rural coverage. I, like 80% of americans reside in urban/suburban areas. So the takeaway is that T-mobile is better overall for most while AT&T and Verizon are clearly leading in overall quality.

    2010 announcement:

    Root Metrics:

  3. Adrian, I give T-Mobile credit for what they have done, but at this time if they remain independent, I will not consider them because they have no sub 1GHz spectrum so far and my area is totally suburban. If T-Mobile works, great! But their latest move of dropping the price of a 4 line account to $100 smells of a pump and dump strategy, the same strategy employed by Nextel. Yes I’m that old :).

  4. Adrian Alfaro

    Your bias is beyond reproach.

    I expect objective neutrality from GigaOM. Not T-Mobile shilling. I’m an AT&T customer that likes fair and balanced reporting.

    If you can’t be objective, no matter how eloquently you may impress your words, you should GTFO and not mar the prestige of GigaOM.

    I WANT Sprint to do well. T-Mobile is a cancer that will only bring it down.

    AT&T is cobbling together different splices of spectrum like Frankenstein for our 4G. It’s not looking pretty.

    Hopefully Sprint gets their shtaco together and takes some subs from VZW. They’re all drones, all of them.

    • Kevin Fitchard

      Hi Adrian,

      Isn’t that exactly what’s Sprint’s doing? It’s cobbling together spectrum from three different bands.

      You may not believe me, but I want Sprint to do well, too. I just don’t think I should just buy its excuses. It’s been at Network Vision for nearly four years. At a certain point, we have to question its commitment to getting this network built.

      • Adrian Alfaro

        Thank you for replying @Kevin Fitchard. I want, (need) Sprint to well in my area.

        I’m in the worst possible market. I’m in Seattle where I will not see 800Mhz 1xAdv. or band 26, and LTE will not launch smoothly do to the difference in maintaining a connection with Band 41/1900Mhz data handoffs.

        I can not recommend Sprint in the Seattle area market because of its predicament with unavailability of their low band spectrum for the next 5 years. Barring 600Mhz rollout with will take at most 4 years.

        I had a Palm PrÄ“ in ’09/’10 with Sprint and experienced great service, with highly dependable data speeds. Now, in 2014 with my single-band iPhone 5S, I’m sourly disappointed.

        Sprint needs VoLTE to be implemented well on their network, and their partner networks. International roaming key to Sprint’s success per their goal to become known as the next AT&T in reliability and reasonable international service rates.

        800Mhz/2.5Ghz/& VoLTE are key toward acquiring the many AT&T + Verizon customers that will not want to keep watching and maintaining their data allowance. There’re enough things in this world to keep an eye on, like your monetary budget, your charges (children, pets, etc.) and yourself.

        Keeping track of your data is an absurd thing to do.

        On another note, per your expertise: What do you think of Drones?

        What of Drones with embedded cellular/LTE connectivity?

        What is GigaOM’s opinion? Will liberals at the FCC hamper innovation? Will they accelerate it compared to a conservative FCC/RINO FCC?

        • Kevin Fitchard

          Hi Adrian,

          My impression of Sprint is that it’s been in a kind of stasis for the last several years, never pulling the trigger on anything because it’s waiting for the other shoe drop. It half-assed WiMAX and now it’s taking the same overly deliberate approach to Spark as it waits for something external to happen: investment in Clearwire, SoftBank’s acquisition, the 600 MHz auction and now its acquisition of T-Mobile.

          I feel at certain point Sprint has stop waiting for the next thing to happen and move forward with what it has. It has the resources of SoftBank to back it up, it has a new agile network architecture and the Nextel albatross is finally gone.

          Sprint has low-band and mid-band spectrum now (and a lot of it), and it can go after low band in the next auction (it will considerable bidding advantages thanks to the new auction rules). I’m not sure if you’re asking whether I think the FCC should approve the merger, but I don’t it should. Sprint T-Mobile would just create another Sprint Nextel.

          As for drones, I got the impression that they’re being targeted at developing markets today, not rural areas in the U.S. If carriers are considering them for the U.S., well that’s going to be an interesting (and extremely controversial debate).

          Thanks for commenting.

    • Why objective neutrality? What I like about GigaOM is its insight. It offers news, analysis, and opinion. If you just want the facts, go read the WSJ (although their facts also include much opinion). If you disagree with Kevin’s opinion, that is one thing, but don’t ding him for having an opinion. That is goofy.

  5. Kevin, I swear you are the most negative writer about Sprint ever. Sprint is replacing it’s whole network from the ground up. Everybody else is doing an overlay. They are 2.5 years into this effort. AT&T abandoned it’s rip and replace strategy (their equivalent of Sprint’s Network Vision) because of cost and weight concerns: http://www.rcrwirele…its-speed-bump/
    They are now covering 254M people with more to be covered by the end of the year. Give them a little credit. BTW, i am a AT&T customer with 4 lines on AT&T and only one on Sprint, just in case you’re wondering. Oh BTW, Verizon still has not put 700MHz LTE on the site that services my place 4.5 years after they started. Hopefully their AWS LTE will reach my condo one of these days.

    • Kevin Fitchard

      Hey Bart, thanks for commenting.

      Yeah, I admit I’ve been pretty down on Sprint lately, but I feel I have good reason. I’ve covered this company for nearly 15 years and nearly that entire time they’re been trying to figure out what to do with the 2.5 GHz band. I agree Network Vision is much more complicated than a network overlay, but at this point they’re just using it as an excuse. They started this project back in 2010.

      • You might be thinking of Verizon and 2010. Because NV actually started being deployed in 2012. They were conceptualizing and planning before then, but the actual deployment did not start until 2012.

    • As former Sprint customer I can tell you I’ll never go back! Just a hunch, no one else will either. My feeling is that sprint is closing towers to save money. They were not doing any improvements in my area 6 months ago when I left them and the service was getting worse every day. I think it would be foolish for tmobile to join them… Just read the Sprint blogs! In my opinion this is a case of bad management.

  6. As the network gets changed, WIMAX gets turned off turning Sprint 4G phones to bricks. So as you travel, your WiMAX phone works part of the time… they guy with the LTE phone works part of the time. Neither one of you have a phone that works ALL the time. And now merging with a GSM company?????? When you get it finished let me know.