Sprint Nextel defends decision to cancel customers


Sprint Nextel Corp. (NYSE: S) has taken quite a bit of flack when it disclosed last week that the wireless carrier was canceling some it its customers that called Sprint customer service too often. I'm quite sure the math is there: unless those customers rack up $200 in monthly cellphone bills, calling X number of times in X period of days may indeed cause Sprint to lose money on them. After all, call center employees are not free, and calls into those massive call centers cost $3 per minute and up.

The wireless carrier is now defending its position to cancel some of these customers. The rumor is that those who made 90 or more calls in a six-month period may be on the shortlist to get that friendly "you are terminated" letter from Sprint. In total, Sprint sent about 1,000 letters out on June 29 to the people that Sprint says were simply too expensive to service. The negative publicity, though, is far more costly.

So why did the carrier make this move?

Are these customers reflective of inept customer service that requires multiple calls or are these people who call over and over until they get what they want? Sprint sides with the latter, saying, "These accounts have been researched very carefully ... we feel strongly that the decisions we made, we stand by them. These decisions weren't made lightly."

This tells me that the 1,000 accounts that were given cancellation notices weren't just picked from a computer flagging system. With these canceled customers calling 40 to 50 times a month in some cases, Sprint believes other customers who may call once or twice may be receiving substandard service (as in wait times). Both AT&T Inc. (NYSE: T) and Verizon Communications Inc. (NYSE: VZ) say they do not cancel customers due to customer service call amounts.

Was this the best-timed move Sprint could have made since it continues to lose customers every quarter while AT&T and Verizon gain them?

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