Wireless providers rely on strong networks to coax consumers to their service, but not all of them perform equally. A new independent RootMetrics study reveals that Sprint (NYSE:S) trails all other U.S. carriers in overall performance. That a dubious position was previously held by rival T-Mobile (NASDAQ:TMUS).
The company didn't fair better in specific categories, either. Sprint took last place for network speed, data performance, and call performance, and just slightly beat T-Mobile in reliability and text performance.
What's the problem?
Sprint has been updating its 3G network to the faster 4G LTE connection, and that has hurt its reliability and overall performance. As a result, Sprint lost 383,000 net subscribers in fiscal fourth-quarter 2013. In the most recent quarter, ending in June, Sprint slowed the hemorrhaging to 220,000 subscribers, but it's going to take some time for the company to truly get back on track.
IDC analyst Carrie MacGillivray said last month, "I'm skeptical they can turn around net adds in order to make a meaningful impact on this fiscal quarter."
But revenue is moving the right direction, albeit slowly. In the fiscal fourth quarter, Sprint reported a profit loss of $151 million, but the company brought that up to $23 million in profit in the first quarter. To make more gains (and woo consumers), Sprint needs its network performance to get much better.
One spark of hope
In addition to upgrading to 4G LTE, Sprint is also creating a new, faster Spark network. The tech uses a tri-band spectrum to deliver fast connectivity -- up to 60 megabits per second, or Mbps -- and could eventually reach 100 Mbps. According to OpenSignal, the average LTE download speeds in the U.S. is just 6.5 Mbps, so Sprint's Spark technology could give the company a huge advantage over its rivals.
Spark is now available in 24 cities, and will reach 100 million people by the end of 2014. The expansion will continue over the next few years, with 100 cities due to be covered by the end of 2016.
RootMetrics acknowledged Sprint could boost its position against T-Mobile and other rivals with Spark, saying, "Sprint's bottom-ranked finish, however, could be short-lived: as Sprint continues its tri-band Spark™ rollout, its speeds could shift into a higher gear." The firm expects both T-Mobile and Sprint to have stronger networks in the second half of this year.
A new Sprint
Aside from its network expansion, Sprint is dealing with two major transitions: dropping plans to buy T-Mobile and hiring a new CEO.
After months of making the case that it needed to merge with T-Mobile to remain competitive, Sprint nixed the plans in August, mostly based on the difficulty it would face in gaining regulatory approval.
At the same time, Sprint replaced CEO Dan Hesse with billionaire Marcelo Claure, founder of the wireless distribution services company, Brightstar. A few weeks ago Claure told The Wall Street Journal, "We're going to leverage the spectrum that we have in order to go back to our roots: unlimited." He plans on using the Spark network as the core of those unlimited data plans.
That alone won't be enough to turn around Sprint. That's why Claure is looking to change the company's management and cut expenses to make Sprint more competitive. The company plans to eliminate an unidentified number of jobs in October, though this was part of the plan under Hesse.
Sprinting for next-to-last place again
With a new CEO and a stronger network being built, the company could leapfrog T-Mobile in overall network performance later this year, but that won't do much for its competitiveness in the short term. T-Mobile gained 1.5 million customers in the second quarter, while Sprint continues to lose hundreds of thousands of customers each quarter.
Slowing this trend will take at least several quarters of strong network growth, along with better advertising and branding. Going back to simple unlimited data plans might help, but as a recent Yahoo! Tech article pointed out, Sprint's plans (at least for the new iPhone 6) remain confusing.
The good news is that Claure brings a fresh set of eyes to Sprint's problems, and the company is building one of the newest (and eventually one of the fastest) networks. The question is whether Sprint can keep enough customers around right now to make those two strategies pay off.
Chris Neiger has no position in any stocks mentioned. The Motley Fool recommends Apple and Yahoo. The Motley Fool owns shares of Apple and Yahoo. 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.