Sprint is better than you think

NEW YORK (CNNMoney.com) -- Sprint Nextel has been maligned in the past for poor customer service and network quality, but new evidence shows that the nation's No. 3 wireless company's improvement efforts are starting to succeed.

According to recent third-party studies, Sprint's (S, Fortune 500) network quality is improving faster than its competitors, its 3G network is the most reliable and it has the best 3G signal strength in the nation's major metropolitan areas. Sprint is also the only wireless provider that has an up-and-running 4G network, and its rates are mostly favorable to its biggest rivals, Verizon Wireless (VZ, Fortune 500) and AT&T (T, Fortune 500).

Sprint's biggest problem -- holding onto customers -- has also started showing signs of a turnaround. Though a net 148,000 customers ended their service with Sprint in the last three months of 2009, that's down from a massive 1.3 million customers who left during the same period a year earlier.

The wireless company credits advances in the quality of its network for helping stem the exodus but notes that it will take time before those improvements really transform subscribers' feelings about their service.

"Our network is underappreciated by our customer base," said Bob Azzi, Sprint's senior vice president of networks. "It's hard to change customer perceptions."

But don't go rushing to your nearest Sprint store just yet. The company still has a lot of work to do, according to independent studies.

Sprint's overall 3G coverage map is smaller than Verizon's and in many regions of the country Sprint's network lags behind its competitors in important metrics like call quality and download speed.

Perhaps most damning, Consumer Reports recently rated Sprint's customer support as the worst by far among the so-called Tier-1 carriers.

"Sprint's service is just behind Verizon's, which is the standout leader," said Mike Gikas, editor of Consumer Reports' 2010 wireless service ratings. "Sprint has some very enticing plans and great phones to go with them, but it's not the service that sinks Sprint, it's when customer support comes into play."

Sprint argues that its overall network improvement strategy is addressing all of those issues, and that in many areas, the company's investments have brought its network into a leadership position.

According to Azzi, Sprint's network has had a double-digit percentage improvement in dropped calls over the past seven years, and it has been able to stay ahead of data demand growth as smartphones become more prevalent and suck up more bandwidth.

By far the boldest move that Sprint has made was outsourcing its network's maintenance and infrastructure management to Ericcson in July. Sprint said the move has helped the company improve network performance faster than it would have been able to on its own. Sprint credited Ericsson's efficiency and experience in managing 80 networks worldwide for the pace of improvements.

"Ericsson has demonstrated how effective they are at managing consistently improving performance and doing it at an ever-decreasing cost," said Azzi.

Sprint said it is using the money it saved by outsourcing its network to solve its customer service issues.

As far as network improvements go, independent analysis largely confirms that Sprint's investments have paid off. PC World in July found that Sprint had the most reliable 3G network in 13 test cities, measured by detecting and reaching a signal and sustaining an uninterrupted connection. Mobile data tracker Root Wireless found in December that Sprint had the best 3G signal strength in seven test cities. And JD Power & Associates said Sprint's network has improved more than any other Tier-1 carrier over the past four years, by all measurements.

But Sprint still has room for improvement. Root Wireless' 3G data test found that Sprint's service had the most interruptions. And another mobile data tracker, Global Wireless Solutions, found Sprint's network did not noticeably improve and the dropped call rate was actually higher in 2009.

Consumer Reports and JD Power and Root Wireless' studies also show that Sprint's network quality varies from area to area. And some analysts contend that Sprint's 3G network improvements are an effect of customer attrition -- a claim that Sprint denies.

Overall, analysts say that Sprint is on the right path and has vastly improved, but the company has to continue to make considerable improvements to its network and customer service reputation to regain subscribers.

"Sprint is dong a good job of investing in its network, and it ranks favorably to its competitors in many key categories," said Ashvin Vellody, senior vice president of network research at Yankee Group. "Although they have done some things to stem the tide of customers leaving, a lot more needs to be done."

To achieve its goals, Sprint said it continues to focus on being the nation's 4G leader, and it believes its new price plans will attract customers.

In September, Sprint unveiled its "Any Mobile, Anytime" plans, which Azzi said the company was able to afford beause of the money it saved through outsourcing. The new plans bundle unlimited data with the ability to call an unlimited number mobile numbers on any plan for no extra cost. Those plans range from $70 to $100, comparing favorably to AT&T and Verizon's deals.

In another important step, the company introduced its 4G network to 27 U.S. markets in 2009, and it believes it will have 4G coverage for 120 million people by the end of 2010. That puts it ahead of Verizon, which is expected to unveil its 4G network coverage for 100 million people this year. AT&T doesn't plan on launching its 4G network until 2011, and T-Mobile has no plans for a 4G network.