24/7 Wall St. asked Sprint (S) CEO Dan Hesse a few questions.Here are his answers.

24/7: Sprint has clearly had trouble with customer service which has shown up in studies like JD Power. You have hired some impressive management to sharply improve that and the move has been heavily covered by the press. What Wall St. and your customers seem to want to know is when will there be a significant enough change in service so that it is on par with your largest competitors?

Hess: We have made progress each month this year in improving the customer experience as evidenced by improvements in both internal and external metrics.

There is always a time lag between perception and reality in the market.  It will take a long time for non-Sprint customers to know about our service improvements because they don’t have recent experiences with us.

Adding to the lag problem are studies like JD Power, which you reference, that ask customers about their experiences over the past 12 months.  In the case of the recently-released JD Power results, this means that experiences with Sprint going back to February 2007 are included.  So, the service issues customers experienced with Sprint in the summer and fall of 2007 are included in the recently released survey results.  So, we will have to wait till the 2009 survey before 2007 customer experiences are no longer a key part of the results.

All of this being said, we still have much progress to be made.

24/7: The national WiMax network would appear to have the chance to give you a huge competitive advantage. Obviously some important partners have stepped in with money and support. What is the timetable for this service to be available to the majority of your approximately 50 million cellular subscribers?

Hess: We have announced that Xohm, our 4G mobile wireless broadband service, will begin in the Baltimore market this fall and then in Washington, D.C. and Chicago. We expect to have built out our WiMAX network to cover 15 million people by year-end.

We have announced a transaction that will merge Xohm with Clearwire to create the first nationwide 4G wireless broadband network. Following the close of the transaction, which we expect will occur in 4Q, the new stand alone company will be called Clearwire, and Sprint will own the largest stake.  Our expectation is that the new company’s network will cover 140 million people by the end of 20¬10.

24/7: AT&T Wireless and Verizon Wireless seem prepared to increase their subscriber bases though acquisitions. Is that an option for Sprint of was the Nextel experience too painful?

We are focused on improving the customer experience, strengthening our brand, and improving our profitability.  Growth is not currently a priority, but it could be in the future.

Douglas A. McIntyre

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