Sprint pins hopes on iPhone but network not coping yet
Carrier reduces losses and postpaid customer losses in Q3, hopes its four-year deal with Apple will accelerate those trends
Published: 26 October, 2011
READ MORE: Financial | US | Sprint Nextel Corporation | iPhone | LTE
Sprint is not known for learning from the mistakes of others, and in embracing the iPhone, it appears to have forgotten AT&T's problems with introducing the product to a network which could not adequately cope with the iPhone's inefficient use of the network and its users' hunger for data. Already, there have been rising complaints that the new iPhone 4S is running unacceptably slowly on the Sprint network, leading customers to consider returning the phones before Friday (when the carrier's early termination fee of up to $350 takes effect).
More than 61 pages of such problems have been recorded on Sprint's community web thread since the iPhone 4S went on sale on October 14. The discussion thread is entitled 'iPhone 4S on 3G data network too slow to be useful'. One user recorded a 4S getting a download speed of 0.2Mbps on a EV-DO Rev A network in San Antonio, Texas, compared to 1.52Mbps on an HTC EVO 4G (with WiMAX turned off), on the same network.
In an emailed statement to Computerworld, Sprint said that overall iPhone performance on its network was "consistent with our expectations and the rest of our high end portfolio." But she added: "We do see opportunities to optimize performance, specifically in high network capacity areas. We see this as typical optimization work and do not have any specific area of concern."
Meanwhile, The Next Web reported that there was an internal Sprint email pointing to a nationwide issue with slow data rates on the iPhone 4S on EV-DO. The web site's story suggested that a software patch might be on the cards from Apple and Sprint to change the phone's program file, which affects how it connects to the network.
Meanwhile, the iPhone was a hot topic on Sprint's quarterly earnings call, with the firm insisting that, like a top rank player recruited to a baseball team, the device would cost a lot upfront, but would justify the expense because it would attract so many new supporters. "The iPhone has an expensive contract, but he's worth every penny," said CEO Dan Hesse. Executives said the carrier has a $15.5bn, four-year contract with Apple, which Sprint expects to "outperform".
Hesse added: "We expect the lifetime value of a typical iPhone customer to be at least 50% - yes, at least 50% - greater than a typical smartphone user, driven primarily by more efficient use of our network and lower churn. That would create $7bn to $8bn in net present value during Sprint's four-year contract with Apple, since the iPhone can generate 20% higher margin than other devices. The carrier also expects the handset to account for between 20% and 40% of its postpaid gross additions and upgrades during those years.
These kind of arguments, by and large, proved justified for AT&T, but that cellco had a long term exclusive, no competition from LTE devices, and better financial reserves than Sprint.
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