Can The iPhone Really Save Sprint (And Can They Stand By Their Unlimited Data)?

Sprint’s had it pretty rough over the last few years. For starters, one of the most popular phones to ever be released was absent on their network, meaning competitor AT&T (and later Verizon) had a lengthy lead on sealing in 2-year contracts with customers. Complicating matters, Sprint’s gamble on next-gen wireless technology with WiMAX didn’t pay off — they have since announced plans to focus on LTE moving forward and have broken up a contract with Lightsquared. In short, misstep after misstep has put a financial burden on Sprint’s coffers.

More recently, it was rumored that Sprint’s board of directors and shareholders were growing antsy with CEO Dan Hesse’s choices and questioning his legitimacy as Sprint’s captain and chief. Critics have also voiced concern with Sprint’s “last ditch” effort to gain large numbers of customers by signing an expensive multi-year, multi-billion deal to secure the iPhone. The iPhone, as popular as it is, takes several years to really reap in the benefits for the carrier, and requires some cash to do so at that. Sprint doesn’t exactly have a bank full of greenbacks like Apple. Naturally, that kind of pressure seems like something that would make a man nervous, especially when an entire cellular company is essentially on your shoulders.

Though it all, however, Hesse is brushing all worry to the side by taking the stance that “it’s all good”. In Hesse’s eyes, the iPhone is a very valuable asset to Sprint’s lineup despite the high subsidization cost and apparent heavy load its putting on their network. The iPhone, according to Hesse, has a much lower level of churn than other smartphones, and in fact uses less data on average than other smartphones. Other figures highlighted by Hesse include that 4 our of 10 new iPhone activations are from 100% new customers — something Sprint desperately needs.

The final variable to consider revolves around Sprint’s steadfast approach to unlimited data. For a nation now covered by capped (and overpriced) data plans, Sprint’s competitively priced, unlimited data plans are a unique feature. Though, as mentioned before, the onslaught of iPhone customers has taken its toll — data speeds have become quite the topic of controversy, with users reporting laughably low data speeds in a number of markets.

Analysts are always quick to jump to conclusions, and are far from perfect in their estimates. But at this stage in the game, Sprint is falling farther and farther behind; the cost of remaining competitive with the two giants (AT&T and Verizon) is rising. Can they catch back up? Sprint literally has nothing left but to risk it on a single or at least limited set of “last ditch efforts”. Currently, they’ve put their faith in the iPhone. Will it pay off soon enough to keep the lights on? It remains to be seen.

One aspect that is getting overlooked in regards to Sprint’s money woes and a potential bankruptcy — T-Mobile. Currently, T-Mobile is the 4th largest carrier in the U.S., with the next closest provider, Sprint, being a distant 3rd. If anything, we should be worrying more about T-Mobile who is also getting into the LTE party rather late, just recently announcing plans to shift away from their HSPA+ rollout. If Sprint were to fold, there would instantly be a ton of wireless users looking for a new home. The immediate default, being a similar CDMA network, is Verizon. Though, because new phones are needed, we’d assume that any carrier would be fair game. T-Mobile could make out pretty well. But even if T-Mobile gained a huge chunk of Sprint customers, they’d still be far behind Verizon and AT&T.

Sprint’s far from out of the fight (yet), but their future is definitely one of an uphill battle.

  • Joe Vargas

    “data speeds have become quite the topic of controversy, with users reporting laughably low data speeds in a number of markets”

    Well said, chief.