Sprint Nextel faces uphill battle with iDEN
What a whirlwind relationship Sprint Nextel has had with its iDEN network over the past year. In early 2008, it said it was absolutely committed to rejuvenating the network but subsequently tried to peddle the iDEN portion of its business. Apparently unable to find a buyer by November 2008, Sprint Nextel again reaffirmed its commitment to the network. And last week, Dan Gillison, Sprint’s national director of state and local public safety, told attendees at the International Wireless Communications Exposition (IWCE) that Sprint remains committed to iDEN. (See Sprint executive: We’re here to stay, March 20.)
Ever since Sprint purchased Nextel Communications in 2005, Nextel’s iDEN push-to-talk business has taken a nose dive. Customers, including public-safety users, have defected at an alarming rate, as Sprint chose to focus more on the consumer CDMA market than the iDEN side of the house, despite the fact that the P2T business historically generated the best revenues in the industry.
It now appears that Sprint is working desperately to replicate that success. Gillison said Sprint has poured $15 billion into its networks since 2006 and that the investment is paying dividends. According to Gillison, dropped and blocked calls overall are at an all-time low, and customer-service calls are at the lowest levels since the merger with Nextel in 2005.
Still, customers are defecting. Sprint lost 1.1 million P2T subscribers in the fourth quarter of 2008 and started the year with 12.4 million subscribers, about one-third less than it had at the end of the third quarter in 2007.
“We’ve had quite a bit of churn, but it has slowed down,” Gillison said. He added that CEO Dan Hesse is concerned enough about the churn that he has instructed the company’s chief customer-service officer to figure out why so many have defected from the P2T network.
Hmm, maybe it’s because iDEN users have heard this before? Can they trust a company that has previously said it was committed to the network but then decides to sell? I do believe Sprint Nextel is sincere about its commitment, but how does it convince business and public-safety users?
Oddly enough, the confidence could come from its prepaid brand Boost Mobile. In an effort to revitalize its iDEN business, Sprint is pushing hard with Boost Mobile, offering competitive plans and a strategy to optimize iDEN performance even with additional customers. Analysts believe that it will be Boost Mobile that finally pushes customer growth and help slow down churn. These positive metrics could be just enough to convince more iDEN users of the company’s sincerity.