Subscribe / Unsubscribe Enewsletters | Login | Register

Pencil Banner

Is Sprint's new half-off deal a desperation move?

Matt Hamblen | Dec. 3, 2014
The offer could be a boost for consumers but a big risk for Sprint, which had shaky revenues in the last quarter.

While Sprint wouldn't say how successful Family Share Pack and other individual plans have been, it did announce a drop in subscriber losses in early November, with 55 million wireless connections at the end of the third quarter. While that was enough for Sprint to remain the nation's third-largest carrier ahead of T-Mobile, it accompanied news of 2,000 more worker layoffs, on top of 5,000 job cuts earlier in the year, bringing the total number of Sprint employees to 30,000.

Entner said the evidence that the Family Share Pack "didn't seem to work" is the announcement of the new "Cut Your Bill in Half" plan. "It's extremely difficult to make money on half-off in wireless," Entner said. "Claure needs to show results, but half-off is one of those things where, you know, you get what you pay for.

"By charging half off, Sprint is implicitly saying that AT&T and Verizon are worth twice as much," Entner said.

Even so, Menezes said, a half-off deal from Sprint "goes after exactly what Claure has identified as big issues: create a simple, compelling value proposition and get consumers back into Sprint stores. This deal is designed to get customers to ask questions, interact with a Sprint rep and give them a shot at undercutting AT&T and Verizon. It's a short and sweet message and designed to make the person who's already out shopping more inclined to hit the Sprint store to find out if they can cut their bill in half."

Half-off customers can try network for 2 weeks
Sprint offers a 14-day return and cancellation policy, so Verizon and AT&T customers who are enticed by the half-off deal might want to test the Sprint network during that period. New customers can do so by seeing how easy a voice or data connection can be made and kept while at work, at home and while commuting.

Sprint's network has undergone persistent service quality problems during its LTE nationwide buildout, the analysts noted. Once customers sign up, Sprint has to keep its new customers happy, "which means new subscribers have to like the Sprint service, which has been lacking of late," Gold said.

Entner said Sprint has been "working through" its network problems, but questioned whether the improvements are coming fast enough. "One thing that concerns me is that they are not doubling down on building out carrier aggregation for LTE Advanced," to provide even faster service.

Network issues aside, Entner said that a half-off deal can attract new customers, even if it doesn't generate revenues and profits for Sprint.

"Consumer advocates dream about this kind of half-off deal, but everybody else with a long view realizes this can only end badly for Sprint," Entner said. "Either the offer doesn't last long or will end badly, but Sprint still has to do something to get people to join them again and be willing to take less profit or actual losses to get people to join them."

 

Previous Page  1  2  3 

Sign up for CIO Asia eNewsletters.