Since taking over as Sprint (NYSE:S) CEO, Marcelo Claure has been applauded for his aggressive efforts to turn the the company's declining fortunes around. Though he has only been on the job since Aug. 11, Claure had made major changes, including eliminating the confusing "Framily" pricing plan, launching the innovative "iPhone for Life" deal, and introducing simplified, cheaper family plans.
The linchpin of that strategy is the company's Sprint Family Share Pack, which offers up to 10 lines for $100, according to the television commercials touting it. "Whether you have a family of two, four, or 10," the commercial states, "switch your whole family to Sprint. You'll only pay 100 bucks a month."
This claim is reinforced by bold graphics that detail how subscribers to the plan will get unlimited talk and text and 20GB of data to share. The spot goes on to tout how the data offered is twice that of rivals AT&T (NYSE:T), Verizon (NYSE:VZ), and T-Mobile (NASDAQ:TMUS).
Based on what is said in the commercial, it's a tremendous deal -- perhaps the best one for a family among the big four wireless companies. The only problem is, you really need to pay attention to the word "switch" as existing Sprint customers cannot take advantage of the deal.
That did not keep the company from emailing its existing customers to tout the new price, even though they are not eligible to actually receive it.
What Sprint is actually offering
Instead of a straightforward pricing plan, what Sprint is actually offering new customers is a deal where it waives per-line fees through the end of 2015.
The Sprint Family Share Pack does cost $100 a month for up to 10 lines before you add the per-line fees that are dropped for new customers. If you're already using Sprint, the only way to actually pay $100 is to have no activated lines (which is not allowed). If you actually want to use phones, tablets, or other devices with the service plan you will pay significantly more.
As you can see in the screenshot above, which is from an email Sprint sent to customers, the Sprint Family Share Pack offers 20GB of data to share for only $100 a month plus $15 a month in an access charge per phone line. That extra fee drops to $10 per line for tablets and rises to $20 a month per line for broadband devices as you can see in the disclaimer text above.
That means that a family of four wouldn't actually pay $100 a month for the Family Share Pack, it would pay $160. These charges aren't even hinted at in the commercial above, but in the email offer they are plain as day. It's hard to even call it a hidden charge because in the email it's not hidden as much as downplayed.
This is a mobile phone company being a mobile phone company
It's not unheard of for a smartphone company to offer incentives for customers to switch from other providers and cable companies do it regularly. The difference here is that Sprint's key competitor, T-Mobile, which is run by CEO John Legere -- who has made passing Sprint to become the No. 3 wireless carrier his company's goal -- offers a family plan that actually costs $100.
Worse for Sprint is that since T-Mobile no longer requires contracts; it's customers are free to move to whatever offer works best for them that month.
Sprint readily admits that T-Mobile offers a cheaper family plan in a graphic on its website, which compares the major carriers.
Biting the hand that feeds you
Sprint has elected to heavily promote a deal that it's not offering to contracted customers -- likely so it can keep those people locked into less favorable pricing offers. That might eek out a few more dollars in the short term, but it's a bad strategy in a market where T-Mobile not only offers lower prices, but will buy out your Sprint contract to get you to switch.
In operating this way, Sprint risks sending its existing customers elsewhere. Current subscribers have clearly noticed the slight as a thread on Sprint's own message board titled "Does the new Family plan punish existing Sprint customers" had 211 posts as of Sept. 17.
Sprint needs new customers, but it also needs to stop its existing subscribers from leaving. In the most recent quarter Sprint reported a loss of 220,000 customers, which follows a drop of 383,000 in the previous quarter, and 520,000 in the same quarter last year. That's bad news, made worse by the fact that T-Mobile has added millions of customers during the same period.
Sprint isn't doing anything by excluding existing customers from its $100 deal that has not been done before, but continuing the practices of an industry known for being shady is not going to help Claure in his battle to convince customers that the company has changed. If Claure plans to truly transform his company, he should start by taking care of his existing subscribers.
Daniel Kline has no position in any stocks mentioned. He remains a contracted Sprint customer. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.