Walking the line between wireless and land-based
Seattle Times technology reporter
A fixture in the local wireless industry, Hesse took a top job in the wireline industry this week.
New title: Chief executive officer of Sprint's Local Telecommunications Division
Background: Has spent more than 27 years in telecommunications, including 23 years at AT&T. From 1997 to 2000, he was president and CEO of Redmond-based AT&T Wireless. Most recently, Hesse was chairman, president and CEO of Terabeam, an optical broadband provider. Terabeam was purchased by Falls Church, Va.-based YDI last year for roughly $64 million in stock.
Changing homes: Has moved from his Kirkland home to the Kansas City area, effective this week. His family — wife Diane Canaday and his two sons — will follow shortly.
For almost a decade, Seattle executive Dan Hesse has been doing everything without wires attached.
That changes with this week's announcement that he'll become the new chief executive of Sprint's local telecommunications division. In that position, he will lead the charge to spin off the division from Sprint, once the wireless division's merger with Nextel Communications is completed later this year. He will also spearhead the effort to make the company more attractive to consumers as wireless, cable and other industries compete to offer the same services. Most recently, Hesse was chief executive of Terabeam, a broadband wireless provider that attracted huge investments by shooting data through the air using lasers. Early last year, he sold the company to Falls Church, Va.-based YDI. Before that, he spent three years as chief executive at Redmond-based AT&T Wireless and 20 years at AT&T.
The Seattle Times caught up with Hesse by phone during his first week on the job in Overland Park, Kan., where he is now based. Here are excerpts of the conversation.
Q: Last time I talked to you, you had just sold Terabeam. That was April 2004, what have you been doing since?
A: I've been serving on three public company boards — Nokia; VF, the largest apparel maker in the world [Nautica, Wrangler, Lee and Jansport are all part of VF]; the Terabeam board — [and] the National Board of Governors of the Boys and Girls Club of America; and three universities; a lot of nonprofit work, and coaching my son's baseball and basketball teams.
Q: What does Sprint's local telecommunications division include?
A: Think of the way telecom companies are structured today. There are four big regional Bell companies, Verizon, BellSouth, SBC and Qwest. We are the next largest.... It's a company with $6 billion in revenue. If we were to spin out today, we'd be number 335 on the Fortune 500 list.
Q: You've been so involved in wireless recently. Why is this an opportunity you wanted to take on?
A: First of all, I'm not looking at this as a land-line world. Yes, we do have a lot of assets in land line, but we are also going to be offering wireless and entertainment.
There's an opportunity to increase revenues in areas like data, like DSL, a product that offers high-speed Internet over the copper wires. Wireless service can be part of the package, and entertainment could be offered through an agreement with someone like an EchoStar [satellite communications provider], or we could possibly put in high-speed lines to carry video as well. That could be fiber to the home, or fiber to the curb with coaxial cable to the home.
Q: What wireless technologies could you use?
A: Fixed wireless — not just mobile wireless — by using Wi-Fi or WiMax and other kinds of wireless technologies that we could use just as well as if not better than others. Local telephone companies have local rights of way through buildings and towers that we own.
Sprint chose someone like me, who isn't just wireline or wireless, because all boundaries are blurring. Everyone can get into everyone's business. We are going to be deploying lots of technologies to service the customers better.
Q: A lot of your former colleagues here in the Northwest are investing and developing technologies you've mentioned. Is it possible you'd tap some of those resources?
A: Anything is possible. ... Two of the states we serve are Washington and Oregon. I'll be coming back to the Northwest to see territories, and people in those markets. I'm not going to be a stranger.
Q: Will an emphasis be on finding new products to serve people as more of them decide to get rid of their land line?
A: Absolutely. That trend will continue. A number of customers will say I don't need both a cellphone and a land line. What we need to do is provide great service, so they'll want to keep it, but also offer more capabilities and price performance over that. We can also tie it in with bundles with their cellphone service.
Q: It appears that Sprint's future advertising campaign after the merger will center on canceling a land line. Is knowing that intimidating?
A: I'm not easily intimidated.
Q: I think you know what I mean.
A: Yes, I do. By giving up another service, you have more money to spend on wireless. Wireless carriers are doing it today. They are trying to get as many people to cut the cord and use their wireless more.
That's not just the strategy of Sprint and Nextel. They are all doing that now. Verizon, Cingular and T-Mobile are all doing it.
That's what I was doing when I was running AT&T Wireless. When we launched the Digital One Rate plan in 1998, that was the first step to making the only phone you needed your cellphone. You could take it anywhere and make a call to anyone and it was the same rate. That's when we started seeing wireless as a substitution.
Q: Some say when Sprint spins off its local division, it will be different. Cingular Wireless, owned by SBC and BellSouth, and Verizon Wireless both have ties to wireline.
A: I don't think so. All the companies realize it. It's more financial portfolio diversification — this one is growing at expense of this one; the minutes are moving from one pocket to another. At least it's in my pants and not into someone else's pants.
Q: Do you have a land line?
A: Oh yeah, I mean, I've always kept land-line service at home and work. I'm talking on one right now. I also have DSL service at home in Kirkland.
Q: If the merger between Sprint and Nextel is expected to close around the third quarter, when would the spinoff occur?
A: I think probably second quarter of next year, but it could take longer. ... It would be a public company.
Q: You must have a lot of work ahead of you.
A: I'm staring at six big, white binders that I have to read right now. I'm drinking out of a fire hose.
But that's one thing that marked my career at AT&T. We were moved fairly often into new assignments. In my AT&T career, I had 14 different jobs. ... It's not new to me to step into something where the learning curve is steep. I like that. It's very exciting. I like this part of the job, where I learn something new every day.
Tricia Duryee: 206-464-3283 or email@example.com
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