The recent divorce of Cable and its partner Sprint (NYSE: S) seems to be another blow for the wireless carrier that has seen its troubles in 2011. Reference Clearwire’s defiance of mutual goals and AT&T’s merger plans, both threatening to derail any substantial growth and stability for the carrier, and eventually may have undermined its position as a long-time and seasoned partner for cable operators in delivering wireless to their customers. See (Cable Must Look at Mobile Partners for Quad-Play)
Maybe Cable Operators saw the “writing on the wall” so to speak, as Sprint struggled with these threats and distractions while trying to keep its viability as a reliable option in delivering what Cable needed and wanted in a wireless partner. Verizon (NYSE: VZ), a staunch competitor for cable, inevitably won the hearts of operators with its behemoth in footprint, especially in the congested and affluent Northeast, along with speed, reliability, and customer service that reverberated in a promise to deliver customers cable needs in continuing its domination within major markets.
As in all messy divorces, Sprint is crying foul with a lawsuit charging infringement on 12 wireless patents it holds on transmission of voice data packets, therefore entering another battle to keep from becoming possibly irrelevant in a fast growing industry which seems to gobble up those with any inference of a sloppy vision or endure market struggles which threaten the ability to deliver shareholder value. So goes the next saga of Sprint where its troubles continue to haunt it like an incessant cloud of gloom. See (Sprint Sues Time Warner, Comcast Over Digital Phone Technology)
What does this mean for the mobile industry? Simply put, as technology companies continue to merge and partner for greater market share, smaller operators like Sprint face a daunting task in staying viable against market leaders such as Verizon, Comcast, AT&T, and Time Warner Cable which continue to devour the best and most lucrative industry footprints. I am convinced bigger is better for company survival in today’s economy, and unless a company vision includes dominance in market share, it will likely be relegated to a regional player subject to possible mergers and acquisitions, wanted or unwanted.
Sprint has created a daunting task for itself to stay relevant in an increasing consolidation of telecom market leaders. If the trend is unchecked, the mobile operator could find itself in the “ditch”, a term coined for companies with low market share which struggle to compete in a “bigger is better” economy. It successfully lobbied against an AT&T-T-Mobile merger, but now faces a blow to its long-time partnership with cable which defined its long-term business model. It either has to create a niche economic model or continue to grow its business passed the 10% market threshold that consistently defines obscurity and obsolescence. Succinctly, Sprint must re-define its vision to include a merger /acquisition or specialize in a niche. See (Competitive Markets and the Rule of Three)
Continued access of capital and investment is imperative to moving in the right direction and it will take strong leadership to navigate the company to a continued viable position in mobile markets. Does this mean Sprint is headed for mediocrity, no, but it must carefully reassess its vision and decide on a concise direction that leads to success and long-term profitability?