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Sprint Warns of US Cellular Switch-Off

Sarah Thomas
8/29/2013

US Cellular customers in St. Louis and Chicago only have a few more months to find a new service provider before Sprint shuts down the network it acquired in May for $480 million.

Sprint Corp. (NYSE: S) reminded customers on Thursday that it would begin shutting down U.S. Cellular Corp. (NYSE: USM)'s network in the St. Louis metro area, including parts of Missouri and Illinois, on October 31. Chicago will be turned down on January 31.

Sprint acquired these portions of spectrum from the regional operator's two biggest markets in May and has been notifying its customers of the plans since June. There were about 585,000 customers affected by the sale. (See: Sprint to Buy Midwest U.S. Cellular Markets.)

Sprint is eager to put this 1,900 MHz PCS spectrum to work, refarming it for its LTE buildout. As such, those customers who don't sign up for Sprint or another operator's service before the sunset date will be left without wireless service and risk losing their current phone numbers.

To woo the US Cellular stragglers, Sprint is promising exclusive device offers on its network or on subsidiary Boost Mobile, which would give them new phone at little to no cost, plus a $50 credit for their troubles. It set up a dedicated website just for them to ease the transition.

While US Cellular still operates in other markets where it, too, is working on deploying LTE, it's had a tough time competing against both bigger rivals and the prepaid value brands. The market dynamics in the US and the big operators' need for more spectrum make it a frequent candidate for future M&A deals. (See: Smaller US Operators to Become Spectrum Snacks?)

— Sarah Reedy, Senior Editor, Light Reading

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Sarah Thomas
Sarah Thomas
9/2/2013 | 5:45:54 PM
Re: Sprint marketing
That's a good point, kaop. I will say that from what I've heard in Chicago, Sprint doesn't have the best reputation right now. I've heard people's employers discourage them from going with Sprint because of the growing pains, and they might not have the perspective of Network Vision and that it will get better. That's just anecdotal, but I do think that targeted marketing and education would really help its cause here.
kaop
kaop
9/1/2013 | 4:52:22 PM
Re: Sprint marketing
They will lose some but maority of customers will be retained.  Having the inside track on existing customers allow targeted marketing effort and retail incentives. 

The small loss of customers will be offset by added spectrum for 4G and improved coverage for Sprint in the areas involved.
Sarah Thomas
Sarah Thomas
9/1/2013 | 2:53:05 PM
Re: Sprint marketing
And maybe with Sprint making the process easier through its site (if it works), customers will be too lazy to look at alternatives. I think a lot also rely on word of mouth and their friends' and family members' reccomendations. That could work in Sprint's favor, or not.
kaop
kaop
9/1/2013 | 2:49:12 PM
Re: Sprint marketing
I'm assuming the cash incentive is on top of their regular promotions.  $50 might not be enticing but enough to keep customers from 'seeking' a new provider.  From their point of view, going with Sprint is a step up from the US Cellular's network and handsets selection; at about the same cost. 
Sarah Thomas
Sarah Thomas
8/30/2013 | 11:56:17 AM
Re: Sprint marketing
Haha yeah, I wasn't even going to include that because the site was down for me for awhile, but then it popped up. Guess it was short lived. 
Sarah Thomas
Sarah Thomas
8/30/2013 | 11:55:40 AM
Re: Sprint marketing
I have a feeling you can't legally not inform customers of their choices. That said, Sprint probably didn't have to advertise them, but at least make them aware. It'd be one thing if they could bring their current phones over to Sprint, but they can't because they are not compatible. I doubt we'll ever see numbers on how many went elsewhere versus to Sprint, but that would be interesting.
MarkC73
MarkC73
8/30/2013 | 4:11:25 AM
Re: Sprint marketing
Heh, I click on your link to see what kind of page Sprint set up to "ease the transition".  And it's temporarily unavailable for enhancements...  Hopefully its just a couple of hours, but kind of found that slightly funny.
MarkC73
MarkC73
8/30/2013 | 4:08:17 AM
Re: Sprint marketing
I'm not familiar with the details of the deal, was there a legal reason they couldn't just convert them and send a new phone over, or at the very least post an automated website that helps the customers move over and select new phones and plans and charge the extra to their bills with a generous discount?

If I was on the regulatory board (not sure if this is PUC/FCC or just FCC), I would make sure Sprint would do everything to first, keep everyone inservice and informed with at least one no cost option, then second give them the choice to change if they wanted too including moving to a different carrier with all early termination fees waived.
Sarah Thomas
Sarah Thomas
8/29/2013 | 2:52:49 PM
Sprint marketing
I spoke to a few people in Chicago who said things along the lines of, "US Cellular was sold to Sprint, so now I'm going to be a Sprint subscriber." Non-nerds might not understand the exact nature of the deal, and it seems some think they didn't have a choice in the matter. It's smart of Sprint to try to angle it that way, so that it can keep its customers from going to others with the switchoff. It lost a ton after iDEN went dark, so it should try to keep these around. May need a better offer than just $50 though.
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