After AT&T and Verizon dropped their unlimited data plans, Sprint continues to be the only carrier offering unlimited plans to new customers. With Sprint using ‘Truly Unlimited’ in their tagline, analysts see this as a marketing stint or a desperate attempt to hold on to subscribers after having faced five years of losses.
AT&T and Verizon stopped offering unlimited plans to new customers in 2010 and 2011 respectively. This March, AT&T began imposing speed limits on their heaviest data users. Verizon went ahead and declared that customers who used subsidized phones will not be upgraded if they continue to prescribe to unlimited plans. However, for Sprint, it is a different situation. In September, they entered into a four year deal with Apple, agreeing to purchase iPhones worth $15.5 billion, in order to be given the permission to sell the device. By the first quarter this year, they managed to activate only 1.5 million iPhones, falling dramatically short of their goal.
Sprint is well aware that they will not benefit from the sale of iPhones at least until 2015. The high subsidy paid by Sprint to sign up their iPhone customers has resulted in their operating profit margin going down by 2 percent. However, Sprint is hoping that the loyalty of Apple customers and long-term profits will help cover up for the high upfront costs, as stated by the company’s spokesman.
On account of their financial issues, Sprint has not been able to offer network upgrades similar to those offered by competitors. They recently announced that on the 15th of July, Dallas, Kansas City, Atlanta, San Antonio and Houston will have access to upgraded 3G services and 4G; a part of their strategy to cover 120 million users by the year end. Meanwhile, AT&T and Verizon are already offering 4G speeds to 75 million and 200 million users respectively. Out of 12,000 sites, Sprint has managed to upgrade only 600 to 4G LTE.
Analysts blame Sprint’s deal with Apple for their inability to invest in upgrades, with the carrier falling short of spectrum to launch a LTE network competitive enough to rival AT&T’s and Verizon’s. The end result, of course, is that Sprint’s customers will end up communicating using a weaker network. Sprint already owns 50 percent stake in Clearwire, a company that is working on building a network based on WiMax, competing with the 4G LTE network. However, ultimately, even if Sprint does manage to sell a lot of iPhones, they will fail at providing the coverage and speed iPhone users demand.