Sprint has said goodbye to CEO Dan Hesse, who reigned over Sprint for 7 years. Taking the now open seat at the head of Sprint’s table is Marcelo Claure. The company who owns Sprint, SoftBank and their leader Masayoshi Son hope that Claure can help piece Sprint back together in the coming years. However, a look into what past CEO Hesse has dealt with could be even more telling as to the future of Sprint-or even the present.
Back in December of 2007, Hesse took over Sprint as CEO, and while he was there to breathe fresh air into the company, he may have only kept the companies head above water. Only one year after becoming CEO of Sprint, Hesse made a public metaphor that displayed Sprint’s efforts to getting rid of the WiMax network they operated on, and introducing 4g. Hesse held an ethernet cord, while Sprint’s CTO used hedge clippers to “cut the cord”. All of this was an attempt to show the world that Hesse wasn’t responsible for WiMax, but was going to get rid of it to better their services.
Actually, many of the issues that Hesse faced, were not of his own doing. WiMax was the decision of his predecessor, Gary Forsee. Some of the issues that Sprint faced during Hesse’s rain over Sprint consisted of a dwindling customer base, networks behind in times, and the company who owns Sprint (SoftBank) caused the focus to be places where focus wasn’t needed.
Two years before Hesse took over Sprint as CEO, the company had acquired a company called Nextel. The acquisition of Nextel caused deep issues for Sprint, that they dealt with for almost 8 years. Customers left Sprint, money was being drained through the Nextel name and overall, it held Sprint back from the other carriers in the US. So, in 2013, Sprint shut down Nextel and the old network it relied on called iDEN. While the mistake of acquiring Sprint was none of Hesse’s doing, he admitted in an interview with Gigaom that the merger was a mistake. What he didn’t know, was that wasn’t the only merger that would affect him.
Still, Nextel and the issues it caused for Sprint were nothing compared to the decision to live in the future and use WiMax actually held Sprint back. WiMax had support from tech giants like Google and Intel, and was thought to be the future of mobile broadband. Sprint thought WiMax would boost them higher than AT&T or Verizon. However, LTE came into the picture, and other carriers began using it rather than other options. The decision to use LTE became the smarter choice as it has now become the standard for mobile internet. While WiMax did have potential, Sprint couldn’t turn it into what it could be-again, thanks to the wasted money in Nextel. Sprint has only launched WiMax in three cities before Hesse decided to get rid of their 4G network by selling them and the spectrum to Clearwire. This meant that Sprint’s 4G networks were being built not by Sprint, but by Clearwire. When Clearwire stopped all construction due to their own financial issues, Sprint fell behind and Verizon and AT&T moved to the number 1 and 2 spots. Sprint assumed they would have WiMax to fall back on, but that wasn’t the case. Instead, they decided it was time to get their 4G back from Clearwire and start building that up. However, the shutdown process was made very difficult thanks to Clearwire being in the picture. This left Sprint juggling the maintenance for CDMA, LTE, WiMax and iDEN networks all at the same time. Sprint was essentially operating as four different networks at the same time.
Once Hesse was able to, he decided to start everything from scratch, operate on a new network, and build up from there. This new effort became known as Network Vision in December of 2010. If Network Vision was finished, it was supposed to let Sprint operate on any 2G, 3G or 4G radio technology, effectively making their service better than any other option available. Spark was launched last year, and while not widely available yet, Spark is supposed to be a 4G like consumers in the US have never seen before. Which is yet another problem Sprint has- always looking to the future, never fixing the problems of the present. Spark is still a young network, and is only available in 27 markets-four years after its creation. Sprint had planned to have Spark widely available sometime later in 2014 or even in 2015, but whether that’s still in the cards is unknown.
While Sprint was focused on ditching the dead weight (Nextel, iDEN, WiMax) and tried to build their new network that would improve the way we get our mobile data, other US carriers were taking consumers away from them. The numbers show that Sprint has lost many of their bread and butter postpaid customers, dropping from 76 percent of their users to 54 percent. Not to mention Son’s focus on acquiring other businesses under the Sprint name.
Sprint was losing customers, they were trying to change and update their networks, and Hesse was keeping Sprint from drowning. Son and SoftBank were trying to acquire companies, like T-Mobile which failed. Doing this, turned Hesse’s attention to the acquisitions rather than their services and plans. Even after Son watched AT&T fail to acquire T-Mobile, they still made the decision to go forward with it all the way until Hesse’s departure.
So while consumers on Sprint’s networks can definitely look to blame Hesse for Sprint’s network troubles and plans, they also need to look to Son and SoftBank for the distractions. Hopefully the new CEO Marcelo Claure, who’s taking over as soon as next week, will be able to mend the company before trying to acquire other ones.