CEO Gary Forsee has left Sprint, and the company’s new management faces a daunting challenge. The new Sprint must have a clear vision of where it is going, and the past is not a good prologue.

During the 1990s, Sprint had the most advanced wireless network in the country, a formidable Internet backbone, pockets of profitable local exchanges, and the no. 3 long-distance service. Despite its enormous assets and capabilities, however, Sprint was timid — a wallflower pining to be bought by a larger rival. Its rivals grew and prospered via mergers. Sprint did not.

In 1999, Worldcom, then led by Bernard Ebbers, agreed to purchase Sprint to form a $120 billion enterprise. The following year, the deal fell apart as the Department of Justice raised concerns about too much concentration in what was then known as the long-distance industry.

It was another five years before Sprint announced another deal, this time a merger with Nextel. Sprint primarily served residential wireless consumers with a CDMA (a type of wireless) technology as well as large enterprise customers, including the federal government, with both wireline and wireless services. Nextel focused quite successfully on the small-business market with its push-to-talk iDEN (another type of wireless) technology. It appeared to have been a match made in heaven.

But the newly merged firm struggled to capitalize on the strengths of either partner, as integrating the networks proved more difficult than was originally anticipated. Nextel’s iDEN network fell behind, and consequently the fiercely loyal Nextel small-business customers left. Now, while its rivals grow with ever more voice and add-on data services, Sprint’s customer base shrinks.

Despite all of its problems, Sprint has enormous potential. It is positioned to bring new advanced mobile wireless services to customers years before its major rivals, including AT&T, Verizon, and T-Mobile. These new services will enable mobile video and data services at speeds available only on a fiber basis today, and make voice-oriented programs an incidental part of the overall system. This should make Sprint services attractive to all segments of wireless consumers: residential, student, small business, large enterprise, and government.

But wireless services are one of the most competitive and innovative industries in America, and Sprint’s new management will face the same challenges faced by Mr. Forsee and his team. There are five national providers and even more regional, local, and resale competitors. And as customers increasingly switch to ever-improving wireless services, prices, and offers, they are switching away from, rather than to, Sprint. While no single remedy will improve Sprint’s prospects, Sprint must invest more in marketing, networks, and customer service to maintain and expand current revenue from its existing base of largely voice-grade customers.

To develop enormous new revenues over the next few years, Sprint must aggressively push forward with the deployment of new services where it is far better positioned than its rivals. To reduce its cost structure and leapfrog its competitors, Sprint should explore and develop new methods for data backhaul — sending data from cell towers back to the Internet — including wireless solutions.

Some observers want Sprint to reassume its passive wallflower days of the 1990s. It could be an attractive takeover target, these observers argue, but with its market capitalization of more than $50 billion makes it unlikely simply to be subsumed by a larger rival. More likely, it could be spun off in pieces, the sum of whose values is likely more than the whole.

But a passive stand-alone Sprint is a company in decline; it will not regain customers or attract investment by remaining a wallflower.

Ultimately, the Sprint board in choosing new management must decide whether to keep the company together or whether to divest it into its many valuable parts. The sober reality is that an independent Sprint faces difficult challenges that require substantial investments—it cannot be magically turned around in one or two quarters.

The problems Sprint faces are not as simple as cutting budgets or selling assets or even executing the details of an otherwise clever plan. The problems are articulating exactly how Sprint can be one of the most innovative and profitable wireless companies. Only with that articulation can Sprint begin to attract the investment needed to make that plan a reality.

A former FCC commissioner, Mr. Furchtgott-Roth is president of Furchtgott-Roth Economic Enterprises. He is organizing a seminar series at the Hudson Institute. He can be reached at hfr@furchtgott-roth.com.