Editor’s note: Russ McGuire is the online director of Business Reform Magazine. Each issue of Business Reform features practical advice on operating successfully in business while glorifying God.
The first couple years of this century weren’t very kind to AT&T and Sprint. On September 10 of this year, Sprint announced their plans for returning to their former glory. Unfortunately for AT&T, Ma Bell may have missed its opportunity to pursue a similar strategy.
On March 9, 1999 AT&T completed the acquisition of TCI, the nation’s largest cable television operator. CEO Michael Armstrong declared it “a huge step forward in the transformation of AT&T to an ‘any-distance’ company.”
TCI was the cornerstone of a huge cable-TV roll-up strategy on which Armstrong bet the company. In 20/20 hindsight, it was a horrible bet that continues to burden the company today, nearly a year after AT&T sold the cable unit to Comcast.
On October 5, 1999 Sprint announced an agreement to be acquired by MCI WorldCom. The international regulatory scrutiny of the deal lasted nearly a year before both companies gave up, realizing they couldn’t overcome antitrust concerns. From October 5, 1999 to today, Sprint has been shadowed by industry assumptions that the company would be swallowed by some larger company, whether WorldCom, a regional Bell, or a global carrier.
However, Sprint never stopped developing innovative services, and in the past few weeks the company announced a major restructuring that may finally position Sprint as a long-term player with a unique and valued service portfolio.
What has Sprint done that is so radical? Merely focus on the customer.
Prior to the September 10 announcement, Sprint had been organized around the company’s assets and operations. Sprint’s wireless company even traded under a separate stock (PCS) from its parent company (FON). From my dealings with the company, Sprint clearly was three different entities: a wireless company, a long distance company, and a local telephone company serving as the dominant telephone provider in about 3,000 communities in 18 states. Each of these entities had a different style, a different culture, and clearly competing internal objectives.
On September 10, Gary Forsee, Sprint’s new CEO, named Len Lauer as the company’s president and chief operating officer. Lauer has most recently been president of PCS and prior to that was president of the long distance business. More dramatically, Forsee announced that the company would be restructured around two customer segments: consumer and business. The company also intends to fold the PCS tracking stock back into the main FON stock.
Sprint is uniquely positioned to deliver integrated solutions that meet the communications needs of consumers and businesses. The needs of those two groups are radically different, but they both involve a combination of local and long distance, voice and Internet/data, and wireline and wireless communications. Sprint has always had all the pieces, but their internal structure constantly got in the way of developing and delivering compelling solutions that made sense for their customers.
With this restructuring, that should change.
Can AT&T follow suit? Unfortunately, no. Following the TCI acquisition, AT&T restructured into four main divisions: Broadband (the cable TV business), Wireless, Consumer, and Business. Since then, the company has dumped Broadband (selling it to Comcast) and Wireless (spinning it off as a completely separate company). Although, theoretically AT&T could still offer solutions including those two components, there are no internal incentives for creating combined solutions that create value for the customer at the potential financial expense of any one of the piece-part providers.
AT&T had a tremendous opportunity to provide unbeatable combinations to consumer and business segments, but they let internal competition and bureaucracy get in the way, hamstringing the Consumer and Business divisions by denying them the killer components (television and wireless respectively) that would’ve blown away the competition.
Can Sprint really rise to the top? Only time will tell. The company’s global strategy remains weak, so Sprint will likely struggle to serve the world’s largest customers. However, with its historic leadership in data and wireless services, and its continued brand strength as a quality voice provider, the company will undoubtedly take its best shot.
About a year ago, Sprint briefed me on their “One Sprint” strategy. Although I agreed the approach would be powerful for customers, I knew that the internal competition would kill the concept. Watching the new management team boldly make the hard decisions to redefine the company to deliver the goods, I have to confess. I’m converted from skeptic to cheerleader.
For the good of the customers, the company, and even the industry, I hope this time Sprint can deliver.
Russ McGuire is Online Director for Business Reform. Prior to joining Business
Reform, Mr. McGuire spent over twenty years in technology industries, performing various roles from writing mission critical software for the nuclear power and defense industries to developing core business strategies in the telecom industry. Mr. McGuire is currently focused on helping businesspeople apply God’s eternal truths to their real-world business challenges through Business Reform’s online services. He can be reached at [email protected].