“These customer losses have been expected. It’s by design,” Hesse explains to CNET.
And he may not just be blowing smoke up our cellphones.
See, Sprint, which has never fully recovered from its 2005 merger with Nextel, is finally getting around to shutting down that company’s dusty old 2G iDEN network with the goal of repurposing it for use by 3G and 4G LTE customers.
“Because of the value of this spectrum we have to move people off it, and re-purpose that spectrum, so it can be used for Network Vision,” says Hesse.
Closing that network down obviously comes at a cost of customers who weren’t terribly thrilled with being told they could no longer use their old phones. Hesse tells CNET that around 40% of the people moved off the old Nextel network decided to jump ship this quarter rather than move over to an upgraded Sprint account.
In addition to losing those customers, Hesse says that Sprint deliberately didn’t spend a lot of money to acquire new subscribers, choosing instead to focus its efforts on moving customers off the iDEN network.
“It’s much more economically beneficial for us to recapture iDEN customers at a lower cost per add than to acquire customers through usual channels,” he explains.
We wonder if Sprint’s potential new owners at SoftBank are in line with this model, especially since Hesse says there are only about 30% through the process of shutting down the iDEN network.