Sprint Subscriber Losses Likely To Improve Network Performance
The wireless carrier hopes the decrease in subscribers will lead to improvements in network quality and customer service, and eventually help reverse its decline.
Sprint Nextel's loss of more than 6 million contract subscribers, although painful, is suddenly showing a silver lining, at least in the eyes of one spectrum analyst. The loss has enabled Sprint to promote its $50 Boost Mobile plan and to offer more efficient spectrum infrastructure to third parties like Virgin Mobile.
"Launching Boost made a lot of sense for Sprint Nextel," said Joe Nordgaard, managing director of Spectral Advantage, a wireless consultancy specializing in spectrum issues. "Because of the loss of subscribers, there's been a growing amount of capacity" on Sprint Nextel's network infrastructure.
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Sprint also provides network infrastructure for Virgin Mobile, which this week reported a first-quarter profit of $13.3 million, an increase from $4.8 million in the first quarter of 2008. The carrier said more than 133,000 net customers left the service, but more varied and robust calling plans helped Virgin Mobile's bottom line. Nordgaard noted that Sprint maintains a wireless network with a big footprint that's being increasingly improved by the loss of millions of Sprint Nextel customers since 2007.
While it struggled during the glory days of contract calling plans, Virgin Mobile has cashed in on the prepaid market as consumers turn more and more to the low-price service. The company's internal research indicates that the U.S. population is increasingly warming to prepaid plans. That research is borne out not only by Virgin Mobile's numbers, but also by those from Leap, Metro PCS, and T-Mobile, all of which are offering prepaid plans.
While Sprint CEO Dan Hesse has acknowledged the continuing decline in contract subscribers, he said he hopes the resulting improvement in network quality, coupled with improved customer service, eventually will help reverse the wireless carrier's decline.
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