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Is Sprint About to Lose One of the Few Advantages It Has Left?

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Bronze-medal wireless carrier Sprint Nextel (NYSE: S  ) doesn't have very many advantages left these days against larger rivals AT&T (NYSE: T  ) and Verizon (NYSE: VZ  ) .

For a short while, it enjoyed a first-mover advantage in 4G as it partnered with Clearwire to erect its 4G WiMAX network. That proved to be a costly mistake, as LTE won the 4G wars and Sprint is now scrambling to build out its LTE network. There goes that advantage.

Roughly a year ago, Sprint teamed up with Google (Nasdaq: GOOG  ) to integrate Big G's popular Google Voice service directly into Sprint devices. Sprint product VP Kevin McGinnis called it "an extremely important event for Sprint" when it was announced a year ago. It was also interesting because Google Voice has been interpreted as a threat to carriers as Ma Bell and Big Red in particular are slow to embrace Voice-Over-Internet Protocol, or VoIP.

A recent study even showed that data now comprises 85% of mobile traffic but just 39% of revenue for mobile-network operators. If you flip that figure around, that implies that the 15% of voice traffic is driving most of the carrier revenue. Translation: We're all paying way too much for voice minutes. Don't even get me started on pure-profit SMS texting plans (which are also threatened by Google Voice's free texting). No wonder they're clinging to legacy voice-minute plans.

That's why Sprint's hookup with Google Voice was so notable, with some even calling Sprint the "most innovative." Sprint customers who used Google Voice got the benefits of expanded voice mail with transcription, call forwarding, and cheaper international calling. And Google foots the bill on those services, which is nice since Sprint is running low on dollars.

In fairness, Sprint recently caught up with an advantage that its larger rivals were enjoying: Apple's (Nasdaq: AAPL  ) iPhone. Sprint now includes the iPhone in its lineup thanks to a $15.5 billion purchase agreement with Apple, despite the fact that the device is a margin- and data-sucking hog.

Well, Google is making eyes at other carriers. Google Voice product manager Vincent Paquet recently told CNET that the company is having discussions with other providers, without naming any specifically. Paquet called the Sprint partnership successful and said it resulted in "a steady stream of people signing up for it."

If Google decides to bring AT&T or Verizon into the fold and the bigger players get to enjoy those benefits at little to no cost, Sprint may be running out of advantages.

Sprint is an American company, and its business is firmly grounded on domestic soil. If you're looking for 3 American Companies Set to Dominate the World through emerging-market growth and international expansion, than don't miss this new special free report. Get it 100% free now while you still can.

Fool contributor Evan Niu owns shares of Apple, AT&T, and Verizon Communications, but he holds no other position in any company mentioned. Check out his holdings and a short bio. The Motley Fool owns shares of Google and Apple. Motley Fool newsletter services have recommended buying shares of Google and Apple and creating a bull call spread position in Apple. The Motley Fool has a disclosure policy. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

Read/Post Comments (5) | Recommend This Article (7)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On March 29, 2012, at 9:34 PM, mnosense wrote:

    I bet if you really follow your own comments in investment, you'll lose for sure.

  • Report this Comment On March 29, 2012, at 9:57 PM, Aryabod wrote:

    I can accept ignorance but stupidity? Please write something worth reading instead of drooling with rubbish.

  • Report this Comment On March 29, 2012, at 10:51 PM, Aryabod wrote:

    Nincompoop or maybe Imbacile.

  • Report this Comment On March 29, 2012, at 10:51 PM, Aryabod wrote:

    Are you an Imbecile? Maybe an Nincompoop?

  • Report this Comment On March 30, 2012, at 9:02 AM, mnosense wrote:

    It's hard for someoneto who has no clue how bad VOIP is on wireless phone. Use some common sense, the carriers would've used low cost VOIP instead of voice already.

    Why do the average people think they're smarter?

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