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How Claure can fix Sprint as it battles T-Mobile

Matt Hamblen | Aug. 11, 2014
What can incoming Sprint CEO Marcelo Claure do to reverse the carrier's declining subscriber base?

Sprint's Framily plan, which has been advertised heavily in a series of recent wacky TV ads, doesn't work out to be less costly than T-Mobile, based on different comparisons, analysts said.

What's more, Framily may be too complex for consumers to understand, MacGillivray suggested.

"Forget about Framily — it's a complicated concept," MacGillivray said. "The market has gone back to the meat and potatoes of mobile services." Sprint must focus on plans that are "easy, affordable and marketed provocatively."

Instead of Framily, Sprint needs to at least match T-Mobile prices and certainly come in at $5 to $10 less per month on average for both voice and data than both AT&T and Verizon, said Roger Entner, an analyst at Recon Analytics.

"Sprint has to become the value leader in the U.S. That's the sweet spot," Entner said in an interview.

Bill Menezes, an analyst at Gartner, agreed. "Price-cutting will get attention and grab customers."

Menezes suggested a range of innovative offers, including changing the structure of how voice and data services are charged.

One possibility: pay-as-you-go pricing for voice and data, similar to how some carriers market pre-paid pricing, he said. That approach means a customer's data allotment or voice minutes never expire at the end of the month.

Another structural change Menezes suggested is to have more flexible data plans. If a customer buys 3 GB per month for $15 and uses up the entire amount, then the customer should be able to add 1GB for $5 — one third the original amount and cost — instead of having to buy another 3GB for $15.

MacGillivray said Sprint's key differentiator for years has been to offer "unlimited data." The company now must heavily market the concept and show what a user can do with so much data, including with streaming video services. "What about a Sprint partnership with Netflix, Pandora or HBO Go?" MacGillivray added.

Menezes also suggests that Sprint set up guarantees of LTE network availability, with refunds to users if the pledge isn't met.

For example, if a customer couldn't reach the LTE network from a smartphone or tablet in a given month above a pre-determined percentage (perhaps 99% of the time), then the customer would get a credit, perhaps 10%, on the next month's bill. "It would be controversial, but different," Menezes said.

Such guarantees, also called Service Level Agreements, have been used in network contracts with businesses, but typically not with consumers. To be able to offer something like an SLA to customers, Sprint will need to bolster its expanding network.

Claure must improve the Sprint network

Wherever possible, especially in areas surrounding major cities into the suburbs, Sprint must provide 4G LTE service connections and speeds, and then highlight significant gaps in T-Mobile service that can drop to 3G and even 2G speeds, Menezes said.

 

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