Leader of Sprint spinoff returns to fill its CEO vacancy

The head of a lucrative local phone venture conceived with Sprint's blessing, who once topped the ranks of AT&T, is returning to the fold to lead Sprint out of the roughest patch in its short history.

Dan Hesse, the former CEO of the original AT&T Wireless division, and who later helped Sprint to form a local phone operator that would be spun off to compete against it, has been tapped to return as Sprint Nextel's next CEO, replacing Gary Forsee.

The move marks the return of one of Sprint's more celebrated veteran leaders, and what many could well perceive as the epitome of the phrase "right man for the job." Until 2000, Hesse spent 23 years at AT&T, where as head of the Wireless division, he and his team literally created the nationwide wireless calling plan. During the turmoil that characterized the final years of the old AT&T Corp.

Before its acquisition by baby-Bell SBC, Hesse himself found flung into a new wilderness, leading upstart wireless company Terabeam through the first four years of its history, just barely surviving the "tech bubble burst" of 2001. (Last September, Terabeam became Proxim Wireless following an acquisition.)

When Hesse first came to Sprint in 2004, it was with the idea of creating a new venture. That venture would become Embarq, an ambitious provider of local phone service, and the provider of a lucrative quadruple-play bundle in conjunction with Dish Network. Embarq provides alternative local phone service to 18 states, and currently relies upon its former corporate parent Sprint to provide nationwide wireless service to that bundle.

In a May 2006 interview with IP Communications, just after Embarq was spun off, Hesse made the case that "the future of our business is convergence." The ability to provide multiple services in one package is perhaps Hesse's singular idea of innovation.

And in a November 2006 speech entitled, "Why Large Companies Should Out-Innovate Small Ones" to his alma mater, the MIT Sloan School of Management, he expanded on that case to argue that if anyone should be doing the innovating in this business, it's the big players like Sprint, not the smaller ones like Terabeam.

The only reason the big players fail to innovate, reads the synopsis of Hesse's speech, is that have made themselves too comfortable with themselves to take the initiative. It takes major capital expenditures and big assets, he said, to move a company to truly innovate in this direction -- as he put it, "shamelessly stealing good ideas" from the competition to figure out the right business model.

It's as if the Embarq CEO had been hanging out the shingle for himself, as it were, all this time, waiting for his big ship to return. It has, and now he's on it. Embarq's former general counsel, Tom Gerke, will take the reins there for now as its interim CEO.

Now, one of Hesse's first jobs may be to rebuild the Sprint Nextel upper ranks, which have been missing more than its CEO of late. After that, one might guess, would be a reconsideration of the company's stance on bundled services. Look for FiOS and U-verse to have a new competitor in 2008.