Sprint CEO aims for winning strategy

A long history

Hesse has a long history of going on the offensive. During his 23 years at AT&T, he developed a reputation for pushing boundaries. As the CEO of AT&T Wireless — the original, before it was acquired by Cingular, now part of the new AT&T — Hesse revolutionized the wireless business by introducing Digital One Rate. The plan offered consumers 600 minutes of anywhere calling for a flat fee of $90 a month. Rivals were outraged: Digital One effectively erased roaming and long-distance charges, which at the time were big moneymakers for cellphone carriers.

As customers began bolting to AT&T, however, carriers had little choice but to follow Hesse's lead. With that, the notion of wireless as a national service was born.

Making lemonade out of lemons is one of Hesse's specialties. Nowhere is that more apparent, perhaps, than with his plans for the Nextel network.

Under Forsee, Nextel's network faltered badly. Performance problems were a function, primarily, of dwindling capacity. Trying to fix the problem, Sprint started moving Nextel customers to Sprint's network, with the goal of retiring Nextel's network over time. A complicating factor was the incompatible technologies of the two networks. Sprint's network is based on CDMA technology; Nextel's IDEN network is based on another standard.

A lot of Nextel customers were unhappy with this solution, and left. The exodus continues.

The lemonade part of this story? So many people have left "that we have spare capacity that we can use" on the Nextel network, Hesse says.

Before the merger, he notes, Nextel claimed deep customer loyalty and the highest revenue-per-subscriber in the wireless business. Hesse thinks he can regain Nextel's glory — and customer loyalty in the process.

How? By rolling out a bigger, even better generation of Push-to-Talk services that will do much more than talk. "Think of it as Push-to-X," Hesse says, ticking off a long list of applications such as e-mail, location services and picture-sharing that can be enabled by Nextel's technology.

This spring, Sprint plans to introduce a family of high-performance Push-to-Talk services that will work flawlessly, he says, on either network. Push-to-X products and services aren't far behind. By doubling down on Push-to-Talk, "We'll get two bites at the apple," Hesse says, adding, "This is a distinct opportunity for us."

Another opportunity, he says, is WiMax. Under Forsee, Sprint sketched out an aggressive plan for investing in WiMax, a next-generation wireless technology that takes the idea of Wi-Fi — small Internet hot spots — and beams it nationally. Sprint, working with Clearwire, planned to spend $5 billion to construct a national WiMax network, with the goal of turning the USA into one, big hot spot.

After Forsee left, some investors pressed Sprint to table WiMax plans, arguing the company needed to focus on its core wireless business. Hesse says no final decision has been reached on WiMax, "But I see no reason to abandon it and don't plan to."

To all those critics who say WiMax will never pan out, Hesse just smiles. "If you looked at the business case for the (Apple) iPod, you never would have done that, either," he says.

Hesse's point: Sometimes leadership is as much about vision as it is about business plans. He gives Foresee a lot of credit for being willing to back WiMax. "It could turn out to be a stroke of genius."

Takeover bait?

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