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Lowenstein’s View: Sprint+T-Mobile+Clearwire merger=short-term pain, long-term gain?

By Seth Buechley
March 17th, 2011

On the eve of CTIA Wireless 2011, here’s a prediction for CTIA 2012: the U.S. operator landscape will look very different. Here we are, in one of the frothiest times in the history of this industry, and we have Sprint Nextel, T-Mobile USA, Clearwire, MetroPCS and Leap Wireless all in the midst, in some shape or form, of “evaluating their strategic options”–which is Wall Street code for “need to merge with someone or be acquired.”

How did we come to this point, and what should happen next? AT&T Mobility and Verizon Wireless have steadily pulled away from the pack. The Apple iPhone was, of course, huge for AT&T. Verizon waited out the iPhone exclusivity period by both betting on Android and reinforcing its network and operational excellence. Both operators have huge “stickiness” factors, with 50 percent+ of their subscribers on family/group plans of some sort and significant business in the enterprise.

In the midst of this, you have to hand it to Sprint CEO Dan Hesse for making a pretty good comeback. He first fixed most of the billing, network and customer services problems that were causing subscribers to leave Sprint. He then created a differentiated strategy, built around: first-to-market with 4G and the successful Evo launch; value pricing for data, with Simply Everything; market segmentation with several MVNO/flank brands; some of the more innovative efforts to create a unique Android experience, with Sprint ID; and an effort to create a positive out of a negative, with the Network Vision initiative. But even with all this, it’s still tough going for the folks in Overland Park, Kan., and Reston, Va.

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