My resolution: be the consumer-focused innovator

Be the consumer-focused innovator

By Dan Hesse, CEO, Sprint (As told to Kevin Fitchard).

Dan Hesse has been the CEO of Sprint since 2007 and is probably most recognizable as the star of many of Sprint’s TV commercials. For the last year, Hesse has made it a personal crusade to fight against the merger of ATT and T-Mobile, a deal he believes would have irrevocably crushed competition in the wireless and stifled innovation. ATT-Mo may now be dead, but Hesse still faces the challenge of leading his company in a market dominated by two giants, ATT and Verizon.

This year, ATT’s attempted acquisition of T-Mobile set off all sorts of alarms, and it made me realize just how tenuous the competitive situation in the U.S. wireless industry is.

People have used the term “Big Four” to describe the industry’s top players, because there is a big difference in size between number four (T-Mobile) and number five (MetroPCS and the other Tier II regional providers). But I think an even a larger difference in size exists between ATT in the number two slot and us at number three, so I’ve always viewed it as the “Big Two.”
The Big Two, Verizon Wireless and ATT, have been getting larger for many years through organic growth and acquisitions. For example, Verizon bought Alltel, and ATT bought Centennial and Dobson. And ATT is buying spectrum from Qualcomm and Verizon is purchasing spectrum from the cable companies. There has been a gradual creep towards becoming a duopoly.

I think people recognize now that most innovation has been coming from Sprint and T-Mobile. T-Mobile was the first to launch Android handsets, followed quickly by Sprint, and Sprint was the first to launch nationwide 4G. These threats are what drove the market to be competitive. Verizon and ATT weren’t responding so much to each other, as they were responding to Sprint and T-Mobile.

The attempted acquisition was a wake-up call that got us to step back and look at what’s been happening over the last several years. I believe that in the long run, the industry will be healthier for it.

In 2012, Sprint’s number one priority will be to modernize the network, a huge project we call “Network Vision.” When I took this job at the end of 2007, we had the iDEN network as well as the CDMA network. With Network Vision, we have the opportunity to go down to one network architecture—single platform with multi-modal base stations—which will support CDMA as well as LTE. It’s a huge investment, but we believe it will give us unrivaled network capability.

We also plan to build out LTE 4G as part of Network Vision. Later in the year, our partner Clearwire plans to put LTE 4G, in addition to WiMAX 4G, in its network. We will be building out more 4G on the Sprint network and we’ll also be improving the capabilities of our 3G network, because we will be putting capability on lower spectrum frequencies, installing new and better equipment with better dB performance that will improve performance. 2012 will be the year that our network will improve noticeably.

In all other areas, our strategy and priorities are going to stay exactly the same for the fifth year in a row because it’s worked.

We’re going to focus on the customer experience, the brand, and continuing to generate cash.
Every operations team meeting begins with customer satisfaction and churn. In 2011, we rose to the top spot in terms of overall customer satisfaction in the American Customer Satisfaction Index. We’re the most improved U.S. company in customer satisfaction across all 47 industries that they study. If you just go back two years, Sprint was consistently dead last in customer satisfaction in every ranking, and now we’re consistently first or close to first.

There are a lot of accomplishments to feel good about this past year. In terms of total net addition of customers, Sprint is the fastest growing brand out of the major wireless post-paid brands in the U.S. In every quarter this year, we added at least one million total net adds across all the categories, post-paid, pre-paid, wholesale. We got the iPhone, we solidified our position with Clearwire, and we raised capital in a tough environment. And on the ATT/T-Mobile front, our message was heard. I believe the tide will continue to turn in the consumer’s favor in 2012.

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