Rumors are swirling Sprint will begin selling Apple’s iconic iPhone this October, bringing the number of carriers supporting the wildly popular phone to three.  Sprint shares soared 10 percent on the news.  But while Sprint customers and shareholders are celebrating the potential imminent arrival of iPhone, launching the phone on the Sprint network is no simple matter, especially for the last remaining carrier delivering truly unlimited data.

On the Plus Side

Apple’s iPhone has become a must-have for a significant number of consumers.  They won’t leave the phone behind to switch carriers, not even for Verizon Wireless, until they introduced the phone earlier this year.  Now Sprint can win its own share of iPhone devotees.

Sprint’s iPhone promotions could draw customers away from larger carriers, especially enticed by Sprint’s worry-free unlimited data plan that has become extinct at other wireless companies.

The iPhone locks customers into new two-year contracts with Sprint, helpful security at a time when AT&T threatens to further consolidate the wireless industry in its efforts to acquire T-Mobile.

On the Down Side

Sprint’s phone subsidy expenses will skyrocket with Apple’s iPhone, which commands the highest subsidies in the industry.  Analysts suspect AT&T currently shells out up to $425 for iPhone 4 and $375 for iPhone 3GS.  Then AT&T sells the phone to consumers for $200 or less, making the subsidy back over the life of the two year contract.  That hits AT&T’s cash on hand hard.  For Sprint, regularly accused by Wall Street of spending too much on customer promotions, it will only increase those costs.  Sprint pays less than $150 for its top of the line Evo phones in comparison.

One guarantee the iPhone always delivers: Lots of data hungry users.  The introduction of the iPhone may ultimately threaten Sprint’s unlimited usage experience because of demand placed on an already burdened 3G network.  There is also no guarantee the first Sprint iPhone will support Sprint’s 4G network.

[flv width=”480″ height=”290″]http://www.phillipdampier.com/video/KMBC Kansas City Sprint May Sell iPhone in October 8-24-11.mp4[/flv]

KMBC in Kansas City talked with customers looking forward to Sprint’s iPhone.  Sprint is a major employer in Kansas City.  (2 minutes)

Sprint’s 4G experience has been nothing to write home about for a number of their customers, who are increasingly disabling the service to save on battery life.

Speed tests of Sprint’s 4G WiMAX experience show increasingly unimpressive results, as the network grows exponentially more crowded with customers trying to capitalize on the higher speeds 4G is supposed to deliver.  The result?  BTIG Research in April found, after exhaustive testing, the average Sprint 4G customer was now getting around 1/1Mbps service from a network that promised to deliver speeds many times that.

This isn't even a contest. (Source: BTIG Research)

Now an increasing number of customers are simply switching the 4G service off completely to extend battery life.

Doug Mahoney, a contributing editor for TechZone360, says he has about given up on WiMAX:

WiMAX tends to stay turned off so I run 3G and there’s no big differences in the convenience of reading email or using simple apps like Twitter and Foursquare.  With more public places starting to offer free WiFi, the case for WiMAX — or LTE — on a smart phone starts to grow weaker between the extra cost and the battery life issue.

Mahoney complains Sprint’s 4G network is simply not robust enough to support consistent speeds and access.  In suburban Washington, he compares Sprint’s 4G coverage to an open air tree, with spotty service scattered across the region.  As a result, his 4G phone spends a lot of time desperately-seeking-signal — a process that accelerates battery depletion.

Given Sprint’s WiMAX “tax” of an additional $10 a month for the service, Mahoney isn’t so certain he’d pay it again on a future Sprint phone.

Are the same speed reductions in store on Verizon’s currently-lightning-fast LTE 4G network few customers use right now?  Perhaps, but Verizon’s brand may force the company to make sure coverage is much stronger than what Sprint customers currently tolerate:

LTE has the same power consumption issues as WiMAX. I suspect Verizon will have better, more ubiquitous LTE coverage just due to the characteristics of the 700 MHz spectrum and physics involved, so I should have faster broadband available in more places rather than the abstract green tree coverage map.

A Sprint customer in Tulsa, Okla., was recently sold a Blackberry plan that included a data add-on service that allowed him to tether his Sprint wireless connection to his laptop, perfect for wireless broadband on the go.

John signed a two-year contract with the company, which included a copy of his plan choice and the charges associated with his account. There it was, right on his bill — Sprint’s “Phone as Modem” add-on, priced at $15 per month.

A few weeks later, the service stopped working, and after multiple phone calls with Sprint, John was told he should have never been sold that data plan add-on; it was only available to corporate customers, not individuals.

John pointed to his contract with Sprint, which clearly showed he was paying to receive the service, but Sprint didn’t care.  Nor would it permit him to exchange his phone for wireless broadband equipment that would provide him with the broadband service he needed.  Why?  Because he was already into his two year contract.

John was left fuming, wondering why Sprint’s contracts allow them to renege on a deal made fair and square while trapping him with equipment he can no longer use to obtain the service he needs.

“To me, they voided the contract when they took away the service without my knowledge,” John told KJRH-TV’s Problem Solver Pete Knutson. “This is principle, this is sole principle.”

John canceled his contract, but Sprint promptly billed him a $125 early termination fee and sent his account to collections, threatening his credit rating.

John was not alone in his predicament.

Sprint quietly canceled its individual “phone as modem” tethering option for Blackberry owners last April, literally stripping the feature off of any plan set up with a personal Social Security number.  Business accounts configured with a Taxpayer ID Number associated with the business name on the account kept the option.

Sprint was supposed to notify affected customers through bill inserts, but since most Sprint customers are now billed electronically, few customers got the message.

Several customers reported they were “notified” when the service simply stopped working one day last spring.  One Shenandoah Valley customer found out the hard way.

“My wife used her 8330 for internet access, and we purchased the MBR900 to tether the phone so she could have it in the best place for reception,” the customer notes.  “Sprint decided to disable the use of the phone as a modem, I thought the router went kaput until she called Sprint.”

It took five rounds of calls with Sprint customer service before finding a support representative with the real answer.

An even bigger question is why a Sprint salesperson pitched John a plan with an option that has not been sold to individuals for nine months.

As has so often been the case, phone companies seeking to avoid bad publicity nearly always waive fees and credit a customer’s account when the media comes calling.  John’s account balance was brought back from collections and promptly credited to reflect a zero balance.

Sprint refused to provide a specific explanation for how this happened. Channel 2’s Knutson advises customers to always check their cell phone contracts to make sure they are actually getting the services they are paying to receive.

[flv width=”480″ height=”380″]http://www.phillipdampier.com/video/KJRH Tulsa Cell company drops service still charges cancellation fee 1-13-11.flv[/flv]

KJRH-TV in Tulsa shares the story of John, a former Sprint customer who didn’t get the service his contract promised.  (2 minutes)