Sprint's World of Pain

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com/ticker/' rel='ticker'>VOD)) and AT&T (T) recently rolled out similar plans, which included only unlimited calling. T-Mobile has unveiled an unlimited calling and data plan for the same price. "We are putting a flag into the ground that we intend to own the data world going forward," says Hesse. "It won't turn the ship around right away but it begins to get us on the path."

Hesse says his turnaround plan hinges on improving the customer experience. Customer service experts and business professors say Sprint has focused too much on productivity and sales growth rather than quality service. Call center reps say a numbers-driven management approach implemented after the merger has led to poor morale among employees, whose bathroom trips are even monitored, and poor service. "If your lack of trust in employees is so low that you are monitoring their bathroom breaks, you are guaranteed to have customer service problems and huge employee morale issues," says Vijay Mehotra, an assistant professor at San Francisco State University who has studied call centers extensively.

Cutting Errors and Adding Products

Hesse, an industry veteran who once ran AT&T Wireless, revealed details of his plans to BusinessWeek last week, but Hesse and Chief Service Officer Bob Johnson announced some other new efforts. First, the company is trying to slash the reasons that customers call Sprint in the first place, by reducing, for instance, billing errors. To achieve a consistent level of quality service in its call centers, Johnson said the company is standardizing its contracts with call center outsourcers and putting a new emphasis on resolving customer problems on the first call.

Some analysts have called for the breakup of Sprint and Nextel. But Hesse downplayed that idea by announcing new plans to promote Nextel's iDEN "push-to-talk" service. Chief among them: Sprint this year will roll out a push-to-talk service on its CDMA network, as well as introducing new handsets such as an iDEN Blackberry device. "We believe [iDEN] can be better utilized at present," said Hesse.

One other option that may fly is to spin off its WiMax division that offers wireless broadband services. Last November, Sprint terminated a letter of intent with wireless broadband provider Clearwire (CLWR). On the fourth-quarter conference call, the company said it continues to have discussions with Clearwire "on potential relationships, but no final agreements have been reached." But it declined to offer specifics. Some analysts speculate that Sprint could form a partnership with Clearwire and other tech companies such as Intel (INTC) or Google (GOOG). Other analysts think a spin-off would help Hesse repair Sprint's core wireless business. "I wouldn't mind seeing them spin it off," says S&P's Moorman. "It would allow Hesse to focus more on their subscriber base."

As Hesse tries to fix Sprint, perhaps the toughest turnaround in Corporate America, his honesty may be his greatest asset. "Our business is not performing well right now because we have not provided the right customer experience," Hesse said in concluding his prepared remarks. "We are working aggressively to turn this around, but our financial performance will not improve overnight." Until then, there won't be much to celebrate.

Ante is the computers department editor for BusinessWeek.