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August 20, 2014

New Sprint CEO Offers More Shared Data for Less

Until a couple of weeks ago, Dan Hesse was the CEO at Sprint. He took over the position in late 2007 and it seems that Hesse has left quite a legacy. When he arrived, the nation’s third largest wireless carrier was reeling from a disastrous merger with Nextel. The company was very much in need of a turnaround strategy. Hesse was supposed to be the catalyst, unfortunately, it turns out that he’s leaving it more or less the way he found it.

Step in the new CEO, Marcelo Claure. After just a week of taking over the top spot in the company, he has made it clear as to how he intends to pick Sprint up by the bootstraps. On Monday, it was announced that there would be a new set of shared data plans, which are being referred to as the Family Share Pack. Essentially, these new plans provide customers with more data per connection at lower costs than Sprint’s rivals.

Gone is the plan that a lot of people had trouble saying, the Framily Plan no longer exists as it is taken over by the Family Share Pack. This new plan would allow, for a family of four, to access up to 20 GB of data for $100 per month. What this does, in effect, is offer twice the amount of data that either AT&T or Verizon offers, which is 10 GB, for the same price.

Another change is the family of four will have a maximum of 10 lines, which is an increase from the four that were previously offered. This means that the new Family Share Pack will allow for a variety of smartphones and tablets to be put on the shared account. These recent announcements seem to mirror the Un-carrier initiatives that were launched by T-Mobile earlier this year. Could we be looking at another price war in the U.S. wireless industry led by Sprint?

According to Re/code, there are several requirements on Sprint’s new plans. Some of the pricing that is being offered is only for a limited time. In addition, to get the cheapest pricing, all customers must be coming from another carrier and bringing over their number. Even for those customers, the $100 per month price tag is good only through the end of 2015 and will require signing up before the end of September. On the other hand, Sprint is offering reimbursement of up to $350 towards ending a contract with another carrier.

Below is an example of Sprint’s new Family Share Plan:

Image via Sprint

In a statement Claure, said, “Sprint is offering the best value to data-hungry consumers. Period. We are doubling the high-speed wireless data because today’s customers rely so much on their smartphones and tablets. The message is simple: We are back in the game. We are going to offer most competitive value for American consumers."

This announcement marks the first move for the new CEO. When he took over the post last week, he mentioned that cutting prices would be his top priority. It also seems that Sprint will have to do the work on its own as talks of a merger with T-Mobile appear to have fallen through.

As was reported in Forbes, Sprint has felt the effects of competition since it has been consistently loosing subscribers to its peers. The impact that this has had on Sprint can be noticed by the fact that the company reported a net loss of 181,000 postpaid and 542,000 prepaid subscribers in the last quarter. In comparison, Verizon and AT&T gained about 1.4 million and 800,000 new users, respectively.

Since a carrier can expect to see a smaller turnaround rate by signing up an entire family, as opposed to individual customers, family plans tend to play a major role, making them a very competitive part of the market. Unlike Sprint’s previous Framily Plan which processed individual bills, the Family Share Pack is returning to a more traditional structure in the fact that the account holder will receive one bill for all lines and devices.

Following up on the statements made by Claure, Kevin Kunkel, who is Sprint’s west region vice president, told Re/code, “We wanted to go with plans that were head-to-head with the competition and take the gloves off.” He also made mention of the fact that this is a “new day” for Sprint. This is in reference to the fact that in addition to an improved network, the last few weeks have delivered a new CEO, as well as new rates.

Will this be enough to turn around Sprint’s current loss of subscribers? Will this lead to a new round of price wars? Since data is increasingly becoming the most important aspect of smartphone usage by customers, network quality and data costs are likely to be the deciding factors for customers in choosing their wireless provider.

Considering that Sprint’s new Family Share Pack is quite arguably the most cost effective data plan currently in the market, combined with its upgraded 4G network, which now covers about 254 million people in 488 cities across the country, can we expect to see Sprint recover lost ground quickly and get back to positive net user adds by the end of 2014? These are all questions the new CEO will be looking to answer.




Edited by Maurice Nagle


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