Sprint Prepares to Cut the Cord

Sprint Corp. started life as Brown Telephone Co. in Abilene, Kan., more than a century ago, a manual switchboard operation that linked homes to Western Union or the town hall. It started selling long-distance service in the mid-1980s, and built a fiber-optic network and a majestic brick campus at its headquarters that is a source of civic pride and commercial power in the Kansas City area.

Now, Sprint is about to redefine and reinvent what it means to be a telephone company by cutting itself free of the phone-line business, and focusing on its prospering wireless division. It's also about to move its corporate headquarters to Reston, and partner with cable companies to offer alternate technologies to replace the traditional phone. The new strategy, as outlined by chief executive Gary D. Forsee, means Sprint, along with cable companies, would market a megabundle of entertainment and communications services. This would include Internet-based phone service, high-speed Internet connections, and television, music and entertainment viewable on a cellular phone. In that world, consumers would be able to communicate through the air, and through cable lines in their homes, without subscribing to services from the old phone company.

For Forsee, that marks a shift in worldview. Forsee grew up in the local phone business, yet no other company has embraced wireless as boldly as Overland Park, Kan.-based Sprint. From its merger with Nextel Communications Inc. of Reston, expected to close later this summer, Sprint-Nextel are to form the largest independent wireless carrier that has no corporate ties to a traditional phone provider. That puts Sprint squarely in a different camp from its bigger competitors, Verizon Wireless and Cingular Wireless. Those companies belong to empires ruled by Verizon Communications Inc. and SBC Communications Inc., already the two biggest phone companies in the country. Verizon recently acquired MCI Inc. and SBC acquired AT&T Corp.

It's formidable competition. Forsee, 55, a born-and-bred Midwesterner and an engineer by training, recognizes that the company has fully switched sides.

"If we're aligned with cable, we're definitely not aligned with the Bells," he said in a recent interview.

Forsee, along with a small number of executives, plans to move to Sprint-Nextel's corporate headquarters in Reston. Although some jobs are to be eliminated, few people in the newly combined company would be asked to move to either Virginia or Kansas, executives of both companies said. The operational headquarters will remain in Overland Park, a Kansas City suburb where Sprint's campus has its own Zip code and occupies 4 million square feet.

Sprint's top executives work in august-looking offices lined with wood paneling and heavy doors reminiscent of an old collegiate library. Forsee speaks in a friendly but businesslike manner, breezing past jokes or small talk to get to the point. But employees say he regularly reaches out from the executive ivory tower, remembering occasions like their anniversaries and graduations.

"He's got a good style about him; people respect him and he gives respect back to people," said Timothy M. Donahue, chief executive of Nextel, who is to be executive chairman of the combined company. That helped Forsee turn around the company within three years. "He doesn't motivate with a stick and we share the desire to be number one," Donahue said.

Unlike the new Sprint, both Cingular and Verizon Wireless have parent companies with a traditional phone-line business to defend, even as customers switch to wireless or Internet-based phones. To keep them, Verizon and SBC are trying to offer bigger packages of phone-and-entertainment services that tie traditional phone services with wireless, Internet and television offerings. Verizon and SBC are partnering with satellite TV providers and spending billions of dollars to build a fiber-optic network that they say will eventually carry television-style programming.

By comparison, nearly 80 percent of Sprint-Nextel's business will come from its 35 million-plus cellular phone users, and it will have roughly 60,000 employees -- about a quarter of Verizon-MCI.

It's essentially a fight that pits the muscular against the lean and nimble, analysts say.

"I have worries about [Sprint-Nextel's] ability to compete versus SBC and Verizon, which is basically a duopoly," particularly because the buyouts of ATT and MCI give Verizon Wireless and Cingular the kind of backing that will make them that much more powerful, said Patrick Comack, an analyst with Zachary Investment Research in Miami. On the other hand, "Sprint won't be distracted," he said, and "wireless is the only area that's assumed to grow in the future."