Dan Hesse 1

As The Market Shifts Slowly To Pre-Paid, Sprint Doubles Down On Contract Customers

April 25, 2013 - Written By Joe Levin

When we reported yesterday about Sprint losing money and customers at a rate that could possibly lead them towards extinction, the reaction on our Google Plus page with the majority of the commenters sharing their horror stories of being with the carrier was more than expected. The near consensus was that not only does their coverage stink but their contract model, even though they offer “truly unlimited data”, will soon be going the way of the dodo bird. This is why Sprint’s CEO Dan Hesse’s comments on a recent conference call should send up more than a few red flags to the people reading this.

Those of us who regularly read, write, or comment on tech blogs tend to be early adopters and as such pay attention to the price of devices as well as how much each carrier charges for their services. When T-Mobile announced their “un-carrier” plans we all let out a collective sigh of relief, not because these type of plans were new to us but because pre-paid was starting to go mainstream. If T-Mobile could nudge the larger carriers into offering similar plans down the road we all win.

Hesse admits he can see the writing on the wall but in the meantime the plan is to milk contract customers for as much as they can until that eventually happens.

“The wireless industry is still a good business to be in. But it will evolve. When it comes to postpaid, we have to focus more on profitability. Because even though growth in our customer base may not increase in this segment, the profitability can still increase. As churn and ARPU improve, the lifetime value of each customer can improve because wireless is more and more important. We are still bullish on the potential of the industry, although the economic model will change. And postpaid phone service will not be as dominant in terms of what drives success in the market.”

There are a couple of things that he could mean by this. He could possibly be hinting at the elimination of unlimited data, which is probably their biggest selling point. Maybe a possible shared plan like AT&T or Verizon offer where you can share data with a family member or even add another device for yourself like a tablet. All possible and very likely as Sprint makes one last push to get every red cent out of their customers.

It’s his quote about subsidies however that may very well push the last holdouts off the network completely.

“The cost of the subsidies keeps going up. And we just can’t afford to allow people to upgrade as often. But we’re not seeing any evidence that customers are interested in upgrading less often. In fact, the opposite might be true, which means the policies we have in place are quite important for the industry.”

So not only are they charging you an arm and a leg for sub par coverage and locking you into a contract while they do it, you can’t even upgrade to a newer device in a reasonable time. I’m not sure what the end game here is with this plan but whatever it is it doesn’t benefit the consumer one bit.

There can’t be too many Sprint die hards left out there but I know they exist so let us know your thoughts on this latest plan to screw you. Are you planning on sticking with a dying carrier holding on to a business model that’s gasping for air? Sprint has shown your their hand…What’s your move?