January 20, 2006
By Charlie Anderson
The spinoff of Sprint Nextel Corp.'s local phone business has settled on a new brand name, but it's being guarded about as heavily as this year's Academy Award winners.
"If I told you," said Dan Hesse, CEO of the spinoff, "I'd have to kill you."
Hesse said Jan. 12 that he had elected the new company's name but that it still had to be cleared to make sure it doesn't conflict with any trademarks. The company plans to unveil the name and logo in February, he said.
The spinoff, which was expected to close 2005 with about $6.8 billion in revenue, has used the place-holder name New Local Company internally since announcing the spinoff in December 2004.
Customers have continued to be presented with the classic red diamond logo of Sprint in the local territories despite Sprint Nextel's adoption of a new yellow-and-black logo in September for its wireless service.
Branding experts said the spinoff's corporate identity takes on heightened importance considering the fact that it will discard a well-known name: Sprint.
The local division has been selling local phone service with the Sprint name in 18 states since 1992. Before that, it was known as United Telecom for two decades. The Sprint brand name, however, will be occupied by the parent, the nearly all-wireless Sprint Nextel.
A top executive of the spinoff hinted in June that it would want a break from tradition anyway.
"United Telecom is a possibility. We still own the name," Mike Fuller, the spinoff's COO, said then. "Some of our thoughts are: Do we want to present ourselves as yesterday's phone company or something fresh, a new company for a new time?"
Hesse plans to position the new brand with an aggressive marketing campaign that includes opening 60 new retail stores centered around immersing customers in a living-room experience with high-speed Internet and satellite television products.
That's because local phone companies no longer can survive selling basic service at regulated rates due to competition from cable companies, Internet-based phone options and wireless replacement.The spinoff plans to sell a bundle of local and long-distance phone service, DSL, satellite television and wireless phone service.
"I think they need to come up with something that encompasses all the things they do," said Andy Valvur, a senior branding strategist at San Francisco-based Igor.
Valvur cited Apple as a good example of flexibility in a brand name.
Branding experts warn that the spinoff could slip up if it tries to pick a name too close to Sprint in an attempt to retain customer loyalty. They cite American Express Financial Advisors, which chose the name Ameriprise after it spun out of American Express last year.
"I'm not a big fan of it," said Michael Barr, president of San Francisco-based NameLab Inc. "The danger here is being half-pregnant."
The Sprint Nextel spinoff hired San Francisco-based SALT Branding to help it pick the new name. Paul Parkin, a SALT principal, said in an interview last year that the new name would tell customers that "it's not business as usual."
Hesse downplays the actual name.
"I don't want to say you could use any name," he said. "But it's more about what you do with it."