Feature Article

June 26, 2013

Why Sprint and Softbank Should Share the Pie with DISH

I recognize that not since the Pittsburgh Penguins fielded the line of Shack, Schinkel and Shock has it been this difficult to determine who is driving to the goal. Even assuming the votes go the right way this week, Softbank’s acquisition of Sprint will still come saddled with the issue of how to bring Clearwire and its spectrum back into the fold, with or without DISH.

Looking at the history of it all, there are an awful lot of weird relationships in the mix. For instance, Softbank and Verizon Wireless were application-development partners and Qualcomm-friendly for years; but with Verizon now looking to free itself of Vodafone, the company’s international view does not seem important. So is Softbank’s invading a form of revenge?

During my time at Bellcore (aka Telcordia, and now called iConectiv / Ericsson), I worked on the Dream ATM network for Sprint, believing that what I was doing would serve to make for a better Internet (a delusion I was under during my time at NYNEX -- aka Verizon -- as well).  

Sprint stopped playing in the residential wireline space when it divested Embarq, which is now part of CenturyLink, which also owns US West … er, I mean Qwest. Never mind; the point is that Sprint specifically wants to be a wireless company and to that end got rid of its “triple play” / quad play strategy for the sole purpose of being a wireless operator. On the Clearwire side, it had the ownership “Dream Team” of Intel, Google, and Comcast, all of whom joined in with Sprint to fund a build-out that should have supplemented everyone. That is until it decided that retail was its goal, which made the cooperation hard to manage, message and market. In turn, this led the members of the Dream Team to write off their investments, leaving Sprint a majority owner of a lot of air and bad marketing materials.

All of this makes it easy to understand why DISH -- and its consumer triple-play vision for its merger with Sprint -- is not playing well with Dan Hesse and the rest of the team. There is one chart in the deck, however, that should make everyone “want to get along,” that being the impact on Churn of having all of your services spring from one source. 

Sources: 2012 IDC, Solon & Co., Virgin Media

The Service Churn illustration is particularly significant given that AT&T and Verizon Wireless are beginning to offer primary services via their wireless networks, and DISH also makes the key point that it can bring to market a bunch of low-cost devices in the 2.5 GHz spectrum in use today in China and India. It also is significant because, as described above, Sprint has not exactly discovered the Holy Grail connection to retail whereas DISH does a pretty good job on consumer sales (although with regard to advertising, DirectTV takes the prize).

The bottom line for Sprint, should they opt not to consider the churn factor (as they have been bleeding lines for a while now), suggests … “Well, either you're closing your eyes to a situation you do not wish to acknowledge, or you are not aware of the caliber of disaster indicated.”

I believe that once Softbank has completed the deal this week, the olive branch should be extended to DISH to somehow bring them into the fold. Though given the history, logic would seem to be a second thought at best.


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