What with Verizon Wireless’ $50 unlimited prepaid plan, AT&T’s $25 monthly GoPhone offer and myriad others out there, you’d think the prepaid sector was in for a tumultuous ride.
The way Boost Mobile Vice President Andre Smith sees it, those types of offers are par for the course and indicative of the segmentation under way in the no-contract space. But, as you might guess, he still thinks Boost offers the best value for the money.
Verizon’s $50 plan pertains to feature phones, and AT&T’s offer is limited to 250 voice minutes. Plus, the $25 plan probably appeals to some degree to a segment that wants a safety or glovebox phone, but that’s not exactly Boost’s core market.
Boost, which is a unit of Sprint Nextel, offers an unlimited $50 plan that also applies to smartphones, although customers who want a new Android device will have to act by Oct. 6 if they want to avoid the additional $5 that will be tacked onto that plan after that date. As of Oct. 6, Boost will add the additional $5 monthly charge for unlimited data and messaging services offered on Android-powered devices.
Smith says it’s not big revelation – there are additional costs associated with providing service to Android devices versus feature phones. After consulting and getting feedback from customers, the company decided to add the $5 charge but keep the “Shrinkage” program. (People who already have an Android on Boost will be grandfathered in and won’t be billed the extra $5 as long as they don’t let their account expire.)
Boost is the first to offer shrinking payments. For every six on-time payments, the customer’s bill will shrink by $5, eventually getting down to as low as $40 a month. Payments do not need to be consecutive to qualify for the next savings milestone.
This week, Boost also announced the launch of the Samsung Transform Ultra, which is a $229.99 Android device with a slide-out keyboard and Mobile ID. It will join Boost’s existing Samsung Galaxy Prevail Android device, which became Samsung’s best-selling no-contract smartphone in just four months.
Some no-contract players have noted that if AT&T were successful in its bid to acquire T-Mobile USA, that would eliminate one prepaid competitor, as T-Mobile has been a strong contender in the space. But Sprint has been the most vocal opponent of the merger, and Smith isn’t veering from the company stance. “That much influence under one organization is just … it’s not good for consumers,” he says.
OK, so what about that segmentation? Is Sprint contractually obligated to run Virgin Mobile as a separate prepaid brand? Smith says no, that has nothing to do with it. The multiple-brand no-contract strategy is there in part because there are various segments in the no-contract wireless space to address. Other companies are starting to recognize that too.
The Virgin brand is strong and resonates with customers who prefer to text before they’d talk – it’s data driven as opposed to voice driven. On the Boost side, “it is about price value first,” he says – which can be summed up in a few words: worry-free simplicity.
It resonates will all those millions who are sitting around the breakfast or dinner table every day trying to figure out how to rationalize monthly expenses – how to do more with less, he says. “We offer them a great alternative,” he says. “The creative team within Sprint Prepaid Group does a great job of showcasing the face of each brand.”
The no-contract space has evolved significantly over the years. “We’re just in the beginning,” he says. His biggest challenge? Getting the word out to cash-strapped consumers in a challenging economy that they could save a lot of money each month if they try Boost. “That’s the challenge – how do we get folks to wake up and tune in to one of the best deals out there.”
Sprint ended the second quarter with 13.8 million prepaid subscribers – 11.1 million on CDMA and 2.7 million on iDEN.
