Friday, June 19, 2015

Sprint Wants to Shut Down its Long Distance Voice Business in September 2015

Call it a sign of the times. Sprint has asked the Federal Communications Commission for permission to get out of the long distance voice business by Sept. 15, 2015.

During its fiscal fourth quarter of 2014 (the first quarter of 2015 on a calendar basis), Spring had long distance voice service revenues of $264 million, down from $289 million in the same period in 2013.

On an annual basis, the long distance voice business might generate less than $1 billion, while requiring operating, marketing and capital expense arguably greater than that.

That, at least, is what one might infer from the fact that Sprint is simply going to shutter the business unit, rather than selling it.

IN 1997, for example, Sprint reported spending $1.2 billion on marketing and promotion, for example.

The issue, of course, is whether there are any buyers. There might not be.

Once upon a time, the long distance voice business was an industry segment in its own right. The former AT&T, MCI and Sprint were, at one time the three leading contestants.

But AT&T was sold to SBC, MCI was absorbed by Worldcom, and then those assets taken over by Verizon. And now Sprint is simply going to shut down its international long distance business.

As recently as 1989, it was still possible to refer to the long distance voice business as “booming,” at a time when long distance voice generated $60 billion in revenue.

Call it a product life cycle: long distance has largely become a feature, not a product, in the domestic U.S. market.

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