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Top 5 Telecom Fiascos of 2014

This year saw the usual parade of folly, with corporate executives and government officials in clown shoes stumbling from one error to the next.

We've rounded up the top five fiascos of 2014, along with several dishonorable mentions, for your schadenfreude enjoyment.

5) Sprint sings the break-up blues
T-Mobile US Inc. CEO John Legere didn't wait after merger talks with Sprint Corp. (NYSE: S) fell apart to start dishing dirt, tweeting that Sprint was in "total chaos." Oh, John, it's tempting to talk trash about your ex, but it just makes you look petty. (See T-Mob's Legere Unleashed: 'Total Chaos at Sprint'.)

This is the proper way to talk about a summer romance that ended:

It was a different story months earlier, as the two companies maneuvered toward a $32 billion merger, with Sprint buying T-Mobile. But Sprint dropped the effort in August citing anticipated barriers from US regulators. (See Sprint Drops Bid for T-Mobile – Reports .)

Soon afterward, Sprint parent SoftBank Corp. replaced CEO Dan Hesse with Marcelo Claure, founder of Brightstar Corp. (See Hesse Out, Claure In: Sprint Is Son's House Now!.)

Just a day into his job, Claure said to expect cost cuts. (See Sprint's New Boss Plans Cost Cuts)

Claure told employees in a town hall meeting that the company will focus on price. "When you have a great network, you don't have to compete on price," he said. "When your network is behind, unfortunately, you have to compete on value and price." (See Sprint CEO: Price Cuts First, Best Network Next .)

In other words, Claure is turning Sprint into the Taco Bell of carriers -- not great, but not bad, and it's cheap and there's plenty of it.

4) Feds twiddle thumbs over net neutrality
The year opened with a landmark ruling from a federal appeals court, which decided that the Federal Communications Commission (FCC) had a right to impose net neutrality rules, but not the rules then in place. The ruling amounted to a big "double-dog-dare-ya" to the FCC to impose Title II regulation on service providers, reclassifying them as common carriers. (See Net Neutrality Fight Not Over.)

Companies and political organizations argued about this for most of the year. FCC head Tom Wheeler seemed to be nearing a resolution in October, separating the "back-end" connection between carriers and content providers from the "retail" connections between carriers and consumers. The proposal would require net neutrality on the back end, classifying that part of the Internet as common carrier, but leaving carriers free to cut special deals with consumers. (See Net Neutrality: Latest Proposal Will Make Everybody Unhappy.)

Then President Obama threw a brick through things, calling on the FCC to adopt strong net neutrality rules for both wireline and wireless providers, including Title II regulation of broadband service. (See Obama Backs Net Neutrality, Stuns Industry.)

And that's where we stand now. The argument over net neutrality has been going on for more than a decade. It needs to be resolved. Until then, carriers don't know what the regulatory climate is going to be and are hobbled in their ability to set strategy and make future investments.

Next Page: Juniper CEO exits ignominiously

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briandnewby 12/27/2014 | 10:58:32 AM
Fiascos With Sprint, specifically, am I the only one who sees it crazy that the whole reason the company pushed the merger with T-Mobile because a smaller carrier couldn't compete with AT&T and Verizon on price, and them, post-merger stoppage, Sprint has gone pricing nutzo?

There were some who believe that there may be a second chance for such a merger, but the main argument for doing so seems shot.
MikeP688 12/28/2014 | 5:06:29 PM
Re: Fiascos As I saw the advertising frenzy, I admit I was tempted--but then decided against it.    On a side note, though, I am not too sure that the Feds will actually "NOT" listen especially as they noted that some 4 Million People submitted comments--and I am happy to report that I was one of them to make sure that all the little people out there were heard :-)

 
briandnewby 12/28/2014 | 8:37:22 PM
Re: Fiascos I'm not sure the feds care about the volume of comments.  I do think it's one of those things that they'll do whatever they want to do, so if the 4 million comments support an argument, they definitely will be included.
MikeP688 12/29/2014 | 2:15:58 AM
Re: Fiascos We hope that they would listen and be responsive.    Let's be hopeful as we assess what the Feds will do in 2015.    There is no other way around it.   

Happy New Year :-) 
mendyk 12/29/2014 | 10:15:20 AM
Re: Fiascos Hi, Brian -- A combined Sprint/T-Mobile would be on equal scale footing with AT&T and Verizon, which would make the lower-cost play a lot more effective. Without that scale, Sprint is embarking on a very low-margin path that probably doesn't have the volume to make it work. As far as Top 5 fiascos go, I'd say the blocking of the merger is at the top of the list.
kq4ym 12/29/2014 | 2:10:41 PM
Re: Fiascos It was interesting the Sprint's CEO admitted "When your network is behind..." as justification for the cost cutting and bargain pricing push.

And what and when the FCC acts is going to be a cliffhanger for many just waiting for the clarification to get moving again in some certainty.
briandnewby 12/29/2014 | 5:01:31 PM
Re: Fiascos I can see how blocking the merger is a miss, but coming out swinging on price does seem like a bigger fiasco.  A low price position can only be sustained with lower costs, and Sprint specifically said it needed the merger to lower costs.

Now, some of the low-price position is more sizzle than steak, so it may not be fair to label this approach (my labeling, not yours) as a fiasco, but I do think it is fair to question the current pricing approach. 
mendyk 12/30/2014 | 8:56:11 AM
Re: Fiascos Agreed -- cutting prices and margins to gain market share works only if you're massive enough to suffer the business hit for the possible long-term gain. Sprint doesn't fit that profile. Then again, it's hard to see exactly what Sprint can do if it's intent on at least putting some market-share distance between itself and T-Mobile.
briandnewby 12/31/2014 | 9:02:25 AM
Re: Fiascos mendyk, I agree, but is the objective to put market share distance between Sprint and T-Mobile?

I'm not sure what the objective for Sprint really is, other than to be a disruptor and a cowboy, and that badge is already worn by T-Mobile.  Market share doesn't swing very quickly in wireless (it can, though, particularly in the device world because devices are durable goods and there is always the chance for a shiny new object).
mendyk 12/31/2014 | 10:36:56 AM
Re: Fiascos The goal for all right-thinking corporate officers at public companies is to "maximize shareholder value" (i.e., make the stock price go up). If Legere is hacking away at margins (one way to make the stock price go up), then logic would point to market-share gain as his plan. Unless I'm missing something, which happens now and then (and then and then).
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