Sprint has struggled to stay alive for more than a decade, constantly fighting for that next wireless customer. It’s been an uphill battle, and success never seemed in the cards. On Wednesday, Sprint finally taps out, with the company .
So ends the long, storied and colorful history of one of the biggest names in the telecommunications industry for the last several decades.
Verizon and AT&T. T-Mobile and Sprint also argue that the merger allows them to better invest in next-generation 5G networks and cover more Americans. Some of the assets will be spun off to Dish Network, which plans to create an alternative wireless service., respectively, creating a larger player better able to compete against rivals
With T-Mobile set to absorb most of Sprint’s business, the deal also signals the end of one of the US telecom industry’s most iconic brands, cemented in the ’90s with its “pin-drop” commercials featuring Murphy Brown‘s Candice Bergen. What followed was decades of near-comical miscalculations, from a disastrous megamerger to a bet on the wrong kind of next-generation wireless technology. Through it all, the company continued to stave off death, finding ways to exist even as the other three national carriers pulled further away.
It’s been a long, twisting road, marked more by setbacks than successes. This is the story of Sprint.
An unlikely beginning
Most of the telecom companies you see today trace their roots back to the original Ma Bell, AT&T. But Sprint can trace its name from Southern Pacific Company, a railroad company that owned telegraph lines. Sprint was the catchy acronym for Southern Pacific Railroad Internal Networking Telephony (SPRINT). It served as Southern Pacific’s entry into the long-distance calling business in 1972.
The business bounced around in its early years, switching owners and merging with United Telecommunications before finally becoming its own Kansas City-based company, Sprint Corp., in 1991. Two years later, it jumped into the wireless business with the purchase of Chicago-based Centel, then the 10th-largest carrier in the country with operations in 22 states.
Sprint rose to prominence in the mid-’90s as a scrappy competitor with its series of “pin drop” commercials, which touted the clarity of its long-distance phone calls. Its current logo, back then emblazoned in red, is a symbol of a pin dropping. The company was able to eat away at the competition with unique calling plans like lower rates for weekend calls and shared long-distance calls. On many of those commercials was Bergen, who touted those features as a reason you should switch services.
After MCI’s attempt to buy Sprint for $129 billion in a long-distance deal was called off in 1999 over regulatory concerns, Sprint established itself as a wireless rival to Cingular and Verizon. It had 20.1 million users in 2004, a distant third behind its two competitors, which each boasted twice the number of users. In a bid to keep up, Sprint began looking for outside partners.
Then the real problems began.
The Nextel disaster
Sprint turned to Nextel Communications, a wireless company known for its walkie-talkie-like cellphone service and, at the time, the fifth-largest wireless provider in the US. In December 2004, the two companies agreed to a $36 billion merger, rebranding the combined wireless entity as Sprint Nextel. The deal was framed as a merger of equals, which almost never ends well.
Giving the combined companies nearly 40 million users, the move was initially praised by some analysts as a “great deal for Sprint.”
“This is really a matter of these companies looking around and wanting to be a big company as well, and trying to match up with Cingular and Verizon,” then-Gartner analyst Tole Hart. “But they’re really operating two very different networks, and it’s going to take awhile to migrate the Nextel customers over to Sprint’s CDMA network.”
But those two “very different networks” turned out to be the critical blow from which Sprint has never been able to fully recover.
The networks — Sprint ran on a technology called CDMA, while Nextel used what was known as iDEN — were incompatible, and the reluctance of management, run by then-CEO Gary Forsee, to pull the plug on one and quickly migrate users proved near-fatal. Sprint was forced to maintain separate networks and sell both Sprint and Nextel devices to customers.
Running two networks means you can’t run any one network well. That led to worsening service quality and a reputation for dropped calls and spotty coverage that the company still hasn’t completely escaped today.
“The original sin was the Nextel merger,” said Avi Greengart, an analyst at Techsponential. “When that proved overvalued and difficult to integrate, Sprint was left with a fragmented network.”
Sprint Nextelwhen Dan Hesse took over as CEO in December 2007. Hesse’s trademark attempt to win back consumers was his “Simply Everything” plan, a then-unprecedented bundle of unlimited voice calls, text messages and data at a time when minutes and text messages could still rack up big bills.
Hesse became the face of the company, with a consistent presence in black-and-white commercials set in New York talking about how the network had improved. For a while, he breathed some life into the company again, and despite its reputation hit, managed to at least slow the rate of customer defections.
His preference for simplicity wasn’t just limited to its cellphone plan. The company got rid of the Sprint-Nextel name, slashed jobs and focused its operations in Overland Park, Kansas, killing off its Nextel legacy HQ in Reston, Virginia. He took some of those resources and poured them into both networks, improving the service and reducing the number of customer complaints.
While Hesse made the call to kill off the Nextel network, he could never really overcome that albatross.
“From that point forward, they were playing small ball, skimping on critical investments to preserve dwindling cash,” said Craig Moffett, an analyst at MoffettNathanson. “As their debt pile grew, they fell further and further behind.”
It was also late to iconic mid-2000s phones such as , and was the last US carrier to get the iPhone. Its big attempt to get into the modern smartphone business with its own exclusive, the , failed to capture an audience.
Then there was the company’s decision to jump into 4G early.
Betting on the wrong horse
Sprint wanted to get ahead of the upcoming 4G wave by launching a next-generation network based on a technology known as WiMax. The early move gave Sprint something to crow about and, for a short time, a hit franchise in the HTC., made by Taiwan-based
Sprint partnered with Clearwire, which received financial backing from Google and several cable companies to push WiMax to even more consumers.
But Sprint backed the wrong horse. Even as the company worked to deploy WiMax throughout the country, the cellphone industry rallied behind LTE as the 4G standard. The industry’s stance meant Sprint needed to pivot its 4G plans, a costly move that would only set it further behind.
By the time Sprint switched gears, Verizon and AT&T were already heavily invested in LTE. T-Mobile, which was also slow to jump into LTE, ramped up quickly once it began its deployment.
“Decisions matter,” Moffett said. “From a disastrous merger with Nextel, to a misplaced bet on WiMax, to one bad network strategy after another, Sprint made just about every wrong decision that could be made.”
The SoftBank savior that never arrived
Even after all of its prior failings, it appeared a savior had arrived in the form of Masayoshi Son, CEO of Japanese carrier SoftBank, who beat out Dish to. Known in Japan for shaking up the local wireless industry, SoftBank was initially viewed as a deep-pocketed backer, promising to invest $8 billion into the company.
“This transaction provides an excellent opportunity for SoftBank to leverage its expertise in smartphones and next-generation high-speed networks, including LTE, to drive the mobile internet revolution in the world’s largest market,”. “Our track record of innovation, combined with Sprint’s strong brand and local leadership provides a constructive beginning toward creating a more competitive American mobile market.”
Son and Hesse didn’t see eye to eye, and with then-smaller rival T-Mobile charging hard under firebrand CEO John Legere, Marcelo Claure joined Sprint as the new CEO. Claure previously ran wireless distributor Brightstar and was close with Son. He was also the first CEO of a major US telecom company that didn’t spend time at Ma Bell. (Legere worked for Hesse in the old AT&T days.)
Claure introduced a few new concepts, including the ability to lease your phone and jaw-dropping offers like a.
While Claure stopped the bleeding, Sprint’s aggressive advertising and pricing tactics could not overcome its network’s shortcomings. Neither could exclusive phones such as(one of the first phones with an edge-to-edge display) or the (from Android creator Andy Rubin).
“Given Sprint’s network and brand troubles, it is not surprising that when unique devices found a home there, it was typically also their grave,” said Greengart.
By 2015, a revitalized T-Mobile officially overtook Sprint for the title of third-largest wireless carrier.
T-Mobile never gave up the lead, sitting at 83.1 million users today, compared with Sprint’s 54.5 million.
It’s noteworthy that today’s deal is not being framed as a merger of equals. The combined company won’t be called T-Mobile-Sprint. It’s been touted as “the New T-Mobile” and will be run by Legere, who next month will.
It’s an unceremonious end, but one that’s poetic given Sprint’s history.
“Sprint lacked a distinct brand identity,” Greengart said. “Verizon was about the network, AT&T was the home of the iPhone, and T-Mobile was the un-carrier. Sprint ended up having to compete on price and plan gimmicks.”
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