How Sprint's (S) New CEO Can Turn Things Around

Congrats, telecom veteran Dan Hesse: You’re the new chief executive at Sprint Nextel. The bad news: You’re running a troubled company. Since Sprint merged with Nextel in 2005, things have gone downhill: while competitors like AT&T (T) and Verizon Wireless bulk up, third-place Sprint is contracting.

What to do? We have some suggestions.

Stop losing customers. The wireless industry is growing, yet Sprint is shrinking — unacceptable! Hesse must get back to the basics here, with simpler pricing plans, better call quality, and much better customer service. Today’s WSJ ($) cites an internal Sprint document “pointing out that Sprint resolved only 53% of problems on the first [customer service] call, compared to 71% for T-Mobile USA, even though Sprint has nearly three-times as many care specialists.” This should be a quick fix: fire the losers, hire competent agents, and move on. And don’t let this problem flare up again.

Get a better phone lineup. Sprint has missed the boat on two major, iconic phones this decade: Motorola’s (MOT) Razr, which arrived at Sprint way too late to matter, and Apple’s (AAPL) iPhone, which is an AT&T (T) exclusive. There are a lot of cool phones out there, and Sprint needs to do a better job landing them. The Palm (PALM) Centro is a pleasant surprise, and Sprint should look to Korea for some cutting-edge CDMA phones. Sprint should also do whatever it takes to beat Verizon Wireless to the CDMA iPhone, whenever one comes out.

Fix the Sprint-Nextel disconnect.
The two systems have never played well together, and Nextel’s walkie-talkie network has had major quality issues. New phones that use Sprint’s network to make phone calls and Nextel’s for walkie-talkie bursts were a start. But even this is more complicated than it should be: a quick burst of walkie-talkie conversation should be a simple feature on any phone. Sprint’s solution — a Qualcomm (QCOM) technology called “QChat” — is supposedly coming in 2008. (The companies’ cultures have supposedly clashed, too. Hesse must figure out how to get people to get along — or get out.)

emphasise data and broadband.
As revenue from phone calls decreases, carriers will need to make more money selling data services. Here Sprint is already ahead of the pack: Its “3G” wireless data network is arguably the best in the U.S., and Sprint has consistently gotten its subscribers to spend more on data than its rivals. Sprint now needs to do a better job marketing its data network: There are a lot of mobile Web users who would be better served on Sprint than with other carriers.

Sprint is also powering the data service for Amazon’s Kindle e-reader. We’re far from convinced that the Kindle is here to stay, but it’s clear that non-phone devices can supply new revenue streams. The company should look to lock up more forward-thinking deals like this.

Don’t give up on WiMax. Sprint has considered spinning off its “4G” WiMax network because of skittish investors. What these investors don’t realise is that Sprint is ahead of its rivals developing a network that could go way beyond mobile phones: For instance, Sprint has sold more than one million data cards for laptops. Each of those customers would be better served with a faster WiMax connection.

Kiss up to Google as much as possible. Sprint was a founding partner in Google’s open handset alliance, and Google will power a portal on Sprint’s forthcoming WiMax network. Google brings a sense of intelligence and high-technology to the table that Sprint’s blue-collar brand desperately needs. Sprint should do everything it can to become Google’s preferred carrier partner, especially if a ‘GPhone’ comes along — even though Google could someday become a competitor.

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