October 15, 2012
Softbank, which owns Japan's third-largest mobile carrier, just announced that it will buy a 70% stake in Sprint Nextel. What exactly will that mean for wireless customers?
First, a little background . . .
In our new book, Outside In, my co-author Kerry Bodine and I describe the customer experience turnaround that CEO Dan Hesse engineered at Sprint. By relentlessly identifying the top problems that customers called to complain about and then systematically eliminating those problems, he took the company from having the lowest customer satisfaction rating of any major US carrier to having the highest customer satisfaction rating. Fewer unhappy customers meant fewer calls to Sprint's contact centers. As a result, Hesse recently reported that Sprint saves $1.7 billion a year from averted call center contacts.
Hesse’s current challenges have centered around shareholder displeasure with the cost of licensing the iPhone and the cost of building out Sprint’s high-speed network capabilities. As I said in a previous blog post, that lack of shareholder support seems strange to me. Isn't it obvious that it's critical to offer customers the smartphone they want and a fast network with a lot of capacity to support that phone — especially in a world where they have so many choices? It should be.
In contrast to current Sprint investors, Softbank President Masayoshi Son understands that smartphones and the networks that fuel them are essential: Not only is Softbank already building a high-speed network to help it compete in the smartphone war in Japan, but also Son said that the iPhone 5 was a trigger for the Sprint deal.
In theory, the shared vision of Hesse and Son should translate into an improved experience for Sprint customers. But as my colleague Charles Golvin points out, that theory won’t turn into reality unless Sprint gets additional wireless spectrum — most likely by acquiring Clearwire, which Sprint already holds a substantial minority interest in. That makes the extent of the customer experience improvement at Sprint unclear until that other shoe drops. What’s not unclear is that Sprint already gets customer experience, and the Softbank deal will make it a more able competitor.
In contrast, AT&T and Verizon have been saying the right things about customer experience, but so far that hasn’t translated into substantial improvements — as it has for Sprint. If they hope to compete effectively against a newly revitalized Sprint, they will need to get serious about applying business discipline to the practice of customer experience. It’s going to be interesting to watch how that shakes out.