Marcelo declares A New Day For Sprint and changes Band 41 priorities
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by Seth Goodwin
Sprint 4G Rollout Updates
Thursday, September 11, 2014 - 11:20 AM MDT
Sprint CEO Marcelo Claure has only been on the job for 3-1/2 weeks, but dramatic changes have already been made. Claure took part in Goldman Sachs 23rd Annual Communacopia Conference this morning in New York City. During the course of an approximately 35 minute onstage interview, Claure’s strategy for Sprint going forward was publicized for the first time.
Claure started by noting the advice he received as a first time CEO of a publicly traded company was “don’t make any changes for the first 100 days.” He continued “I just couldn't help myself. On day 4 we changed everything we do from the time we go to market.” In his first meeting with Sprint’s vice presidents in Overland Park, Claure asked a simple question. Why would anyone buy a Sprint phone?
The question itself was somewhat rhetorical. As Claure noted to the audience “really there wasn't really any compelling value proposition [at Sprint]." He noted that Sprint was more expensive than some of their competitors while still “coming out of a pretty traumatic network experience.” As to Framily, Claure discussed that even he himself had a hard time understanding how the plan worked, and was less than thrilled that “We were marketing with a hamster talking to people."
The Way Forward
Insight into Claure’s strategy can be traced back to his time at Brightstar. Over a 15 year period, Marcelo transformed a company from selling cellphones out of the trunk of his car in Miami, to a full scale cellular logistics corporation with over $10 billion in revenue in 2013. This entrepreneurial spirit and underdog mentality is what he is seeking to replicate at Sprint.
Plans
In the wake of complicated plans and the success of family share plans at Verizon and AT&T, Claure identified this as Sprint’s first target. Within his first four days on the job, Sprint’s post-paid plan offerings were drastically overhauled. He emphasized Sprint’s commitment to match or beat AT&T and Verizon on price as well as surpassing them by doubling the data offered on comparable competitor’s plans. By the end of Week 1, a competitive individual plan was also released.
By essentially concentrating plan offerings to two simple to understand plans, Claure sees the ability to market and sell these plans to consumers being easier going forward. He told store employees forget about the rule book “just go out there and be an entrepreneur… It is incredible when you empower your employees and allow them to be entrepreneurs the type of things that start to happen.”
Network
Claure is aware of the importance of the network. He specifically noted that he monitors network performance daily. Even with that, he is optimistic about where he's taking Sprint into the future. “The network is our product…We provide connectivity and the network needs to be good in order for customers to come.” He also was gracious towards what former CEO Dan Hesse had already accomplished on the network side before leaving. “He made a pretty bold move,” Claure said. “We basically went and did a whole rip and replace of our network.”
Marcelo noted that most of the network hardware replacement is done. Something the S4GRU sponsor site statistics bear out. Without providing details, Claure underscored something we have been hearing out of Sprint for the past several months...that the deployment of LTE Bands 25 and 26 are being accelerated with 255 million POP's now covered by Sprint LTE.
As we have discussed on this site numerous times, Spectrum is ultimately one of Sprint’s key differentiators. “We have over 160MHz in the 2.5 band. Our majority shareholders entire secret sauce in Japan was based on their 2.5 network.” Marcelo said 60 million POP's are currently covered by Band 41 LTE. These are former Clearwire WiMax sites that have been converted to Sprint’s Spark LTE. One of the more interesting aspects of this morning’s event was the change in Sprint’s 8T8R Band 41 deployment strategy.
Marcelo elaborated, “We are going to move to a smarter model in terms of how we deploy our equipment” going forward. He discussed that when he arrived, Sprint’s plan was simply to deploy new Band 41 8T8R equipment across their over 30,000 sites. Which is essentially all their existing full build Network Vision sites. The problem with this strategy according to Claure is that this “takes us too long to be good anywhere.” The new strategy has 2.5 LTE (Band 41) deployments being concentrated in areas where the existing network is overburdened.
In the second wave of the Band 41 8T8R deployment attack, Sprint will be “going strong after a few cities...focusing on a few critical markets and deploying an experience that hasn't been seen yet in the U.S.”
Shifting the focus to areas that need the extra capacity first is strategically important. If implemented properly, getting Band 41 LTE sites deployed across all markets where they are absolutely needed for extra capacity will help make the network more usable for end users. “There is no need for us to plaster the nation with 2.5, because it is going to take too long,” Claure said. “Rather we’d like to get some wins early on.”
The Near-Term Plan
To Claure, ultimately price and the network is Sprint’s winning value proposition. He noted in the wireless industry, you can either compete on price as T-Mobile has been aggressively doing as of late, or you can compete on the quality of your network as Verizon or AT&T does. That left Sprint in a precarious position, “we were the most expensive and our network is a work in progress.” Claure added, “You are going to see us now be the value driver… And potentially in the market for a really strong advertisement network.” Claure concluded, “If you can have price and the really strong network; you have a winning value proposition."
To compete on value in the near-term, expect Sprint to aggressively counteract competitor’s moves. Claure gave the example of T-Mobile announcing a guaranteed best price on a device buyback or trade-in. Later that afternoon Sprint countered, offering to do better than T-Mobile. Sprint was in part able to make this play due synergies with Claure’s former company Brightstar, now fully owned by Softbank.
Brightstar is the largest player in the phone trade-in market in the world. Claure noted synergies between Sprint and the over 1,000 companies Softbank owns or does business with are a competitive advantage. He noted that the value proposition is Sprint’s optimal strategy at this point and concluded by saying Sprint must be the ultimate disruptor in the industry.
You can say what you want about Sprint's past. But the future is changing. It's squarely in Marcelo's hands. And he's gaining momentum.
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