By Kevin Fitchard
Jun 16, 2008 12:00 AM
Since taking over as CEO of Sprint Nextel in December, Dan Hesse has become the face of the company, not just to its shareholders and employees, but to its customers and the public at large. Heís the star of Sprintís new advertisements, and his e-mail address is being flashed up on TV screens across the nation.
His short tenure at Sprint hasnít just been marked by cosmetic and promotional changes. Taking a cue from his early success with the groundbreaking Digital One Rate at AT&T Wireless, Hesse kicked off a new business model in wireless: unlimited access to all services for a set monthly fee. He also placed Sprintís WiMAX project on firm footing by creating a joint venture with Clearwire and a slew of investors.
But Hesse still has plenty of obstacles to face. Heís seen Sprint only through a single earnings quarter, but it was a bad one ó financial and customer losses continue to mount. Now that the WiMAX issue has been put to bed, he must deal with Nextel, which continues to drag down the operator and is now facing increased pressure from the FCC to reconfigure its spectrum. In a recent interview with Telephony Senior Editor Kevin Fitchard, Hesse discussed the challenges Sprint faces as well as Sprintís investment in WiMAX and the carrierís reputation of being a maverick in the industry.
On being the face of Sprintís new branding campaign:
The big advantage of being on TV is Iíve reacquainted myself with so many of my old high-school friends I havenít seen since then. I went to high school in Germany. My father was stationed over there. As is the case with many military brats, we get scattered to the wind. Itís been a great opportunity to hear from so many people I havenít heard from for so long. Theyíve been responding to Dan@Sprint.com on the commercials. There are lots of great comments from customers about the Simply Everything plan, a lot of questions about the company, but a number of people have sent personal e-mails to me after seeing the commercials.
On the obstacles Sprint faces:
The No. 1 challenge is really establishing a very clear brand and market position. You donít build or communicate a strong brand position overnight. It will take some time to build that, but weíve already created many of the proof points around it: the Unlimited Everything plan, Nextel Direct Connect, AirCards. Soon weíll be adding to that with fourth-generation WiMAX.
I think weíve created a very clear message, one that is resonating and working well with customers, but it takes a while to establish this kind of brand, especially in a competitive environment where your two biggest competitors have what we call in the industry ďa share of voice.Ē AT&T and Verizon have an enormous share of voice. It seems every time I turn on the TV, every ad is a Verizon or AT&T ad. Establishing a clear brand in an environment where your competitors are spending that much is a challenge for us. Customers are clearly demanding. They have many more alternatives than they had many years ago in terms of providers they can buy from. Therefore, the customer experience becomes very, very important. In past years we could have done a better job in terms of providing a great customer experience, and weíre trying very hard to improve.
On why the Sprint brand needs fixing:
The name Sprint in the last couple of years didnít stand for something that clearly resonated with customers. We didnít have a clear brand message that customers, No. 1, remembered and, No. 2, moved the needle in terms of being something they cared about. We had to create, if you will, a very clear message of what Sprint stands for, one that answers the question, ďWhy Sprint?Ē
On the evolution of the wireless industry:
Whatís really beginning to take hold is the growth of data. Last year was the first year in which half of U.S. wireless customers used data in some form, whether it was text, e-mail or surfing the Web. Data is now really beginning to take hold and become part of the wireless universe. Voice is still predominant. Itís larger than data, but the growth of data is the fastest-growing part of the industry. Itís what our Now Network is all about: instant gratification. Customers want anything they can get at home or at work on their mobile device. This expectation around now and immediacy and urgency is what is becoming increasingly important and separating the winners from losers going forward. With that comes increasing complexity. These are not just phones anymore. The requirement for the carriers is not only figuring out the complexity of the device, but marrying it to the network.
On how his view of WiMAX compares with his predecessors:
I really have to give Gary Forsee credit, as well as CTO Barry West. It was really their vision that got the WiMAX project moving forward. My view doesnít differ from theirs. When I came to Sprint, I evaluated WiMAX: Did it make sense to get out there well in advance of the competition? Was it important? Was it worth the risk? There is always the risk in being first with a new a technology. I reached the same conclusion as they did: The benefits and opportunities that come with taking that risk are greater than the downsides.
On getting to 4G first:
We want to have as much of a lead in terms of time-to-market as possible. Depending on who you believe, our advantage is anywhere from two to five years. There are lots of different schools out there in terms of when [long-term evolution] will be ready for prime time, but there arenít any questions with respect to WiMAX. Itís working now. There are 90-some vendors. Itís deployed in 116 countries. We will put the pedal to the metal when the time is right to get as much coverage as quickly as possible, but weíll also be consistent with prudent financial and capital spending management. Clearly you canít just go build it all and expect they will come. There has to be consideration of timing of cash flows, between putting the capital out there and the revenue coming in. We do see WiMAX as having a substantial advantage, two years at an absolute minimum. Thatís something we will be very cognizant of when we make our deployment decisions. Weíll get WiMAX in as many key markets as we can, as quickly as possible.
On Sprint being a maverick:
When youíre No. 3 in size, you have to do something different; you have to do things first. You donít want to come out with the same product at the same time and ó to use a boxing analogy ó go in the middle of the ring with AT&T and Verizon and slug it out. You have to be a little more adept. You might want to try ďrope-a-dope,Ē as Muhammad Ali would say. I wouldnít say Sprint is a maverick so much as Iíd say you have to stake out a clear and differentiated position if you donít have as much size and scale. Sprint obviously has a lot of size and scale, but itís still not the size of an AT&T or Verizon.