New Sprint CEO plans tariff and job cuts
Marcelo Claure leaps into battle with TMo counterpart John Legere, promising new pricing as early as this week
Published: 18 August, 2014
Thrown into the lions' den at Sprint, new CEO Marcelo Claure has come out fighting, making pledges which will inevitably be presented as the start of a gladiatorial battle with John Legere, his outspoken counterpart at T-Mobile.
Now the prospect of the US's third and fourth mobile carriers merging has disappeared, both companies will be free to battle openly for the number three position, which will mean courting new partners. TMo is, of course, being wooed by France's Iliad, and Dish Network will no doubt be hoping to exploit the latest situation to its advantage, more effectively than it did during the saga of Sprint's takeover by Softbank.
Claure will know that both companies must guard against their head-to-head battle becoming mutually destructive, and therefore a benefit mainly to AT&T and Verizon. Legere has shown some strength so far in disrupting AT&T, in particular, with its 'Uncarrier' initiatives, and Claure needs to respond to those while also addressing Sprint's greatest problem, the unending erosion of its high end, postpaid base.
His predecessor Dan Hesse stuck to the traditional Sprint line of focusing on an innovative network to attract the best customers back from the big two operators. But this was often at the expense of speaking directly to consumers about shorter term attractions such as financing deals and customer service improvements - both areas where Legere's TMo has done well.
Claure's initial comments, and his expected announcements this week, suggest he will shift that balance, putting immediate customer benefits at the forefront, rather than the ambitious LTE and Network Vision infrastructure programs, which are yet to be completed or to deliver their promises (indeed, the upgrade to LTE has actually caused temporary network service problems in some areas, worsening the problem of customer losses).
Claure addressed Sprint's employees on Thursday and is expected to announce price cuts as early as this week. According to reports of the internal briefing, obtained by LightReading.com, Claure said: "We're going to change our plans to make sure every customer in America thinks twice about signing up to a competitor", promising "very disruptive" plans.
The official spokespeople at Sprint are positioning the carrier to be associated with the "best value in the market", which will presumably lead to an intensification of the recent US mobile price war. The interesting thing will be how Verizon and AT&T will respond. They have been very cautious about being dragged into pricing battles, and have tended to remain focused on postpaid customers, which make up most of their base, while the most aggressive price competition has been in prepaid. Indeed, despite acquiring prepaid carrier Leap, AT&T has made it very clear that purchase was all about spectrum and has made little effort to retain the customers.
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