Leap Wireless International CEO Doug Hutcheson appeared undaunted by competition from Verizon’s new $50 unlimited prepaid plan during an interview at the Bank of America Merrill Lynch Media, Communications & Entertainment conference on Wednesday.
The prepaid provider’s top executive said Verizon’s new plan was more appealing to postpaid subscribers looking to switch to prepaid and did not view it as a threat to its Cricket subsidiary, whose $45 plans are cheaper than those now offered by Verizon Wireless.
However, the operator is taking precautions to protect its share of the prepaid market and intends to bulwark its holiday device lineup with new smartphones and feature phones. Cricket will also introduce premium price plans next year that would allow customers to boost data speeds after they had passed their limit, Hutcheson said.
“If they use up their bucket of high speed data, they’ll be able to buy that back up,” he said.
The company voiced a bullish note on smartphones, saying it expected more than half of its customers to use smartphones in the coming quarters as the feature phone business became “relatively thin.”
Company CFO Walter Berger also spoke during the event, touting the company’s popular Muve Music plans.
“The consumer, quite frankly, wants to have great optionality in as few devices as possible. So if a consumer can have talk, text, data, content, perhaps a mobile wallet, etcetera, all on a single powerful handset, that’s a very much more compelling answer,” Berger said. “As you think about the buying and consuming habits of younger people, they want the simplicity of this product.”
Berger said preliminary research showed its Muve Music service had the highest customer satisfaction of any product Leap had put on the market.
Hutcheson also shed some light on Leap’s LTE plans. The company is waiting for prices on LTE smartphones to drop below the $200 mark and will begin rolling out the service over the next 2 to 3 years.
Leap is going with FDD-LTE, the flavor deployed by Verizon Wireless and AT&T. Vendors haven’t been selected, but companies that provided Leap’s 3G equipment – Alcatel-Lucent, Ericsson and Huawei – may be in the running.
“We have not selected all of the vendors for the different phases, but clearly have vendors very active on markets now. (We) haven’t announced those, but our infrastructure right now is a combination of Alcatel-Lucent and Nortel – now Ericsson – and Huawei,” Hutcheson said. “Those suppliers are all active in the 3G arena and we’ll continue to look at the decisions we make on that.”
Hutcheson said the company had spectrum set aside for the service, managing its network resources so it could deploy LTE when the time came.
“We have from the inception kept spectrum available for LTE,” he said. “From three years ago, we have had the belief set that LTE is going to come and have been really thoughtful in how we’ve used our spectrum.”
Throttling heavy data users was cited by Hutcheson as a key network management technique.
AT&T’s merger with T-Mobile USA also came up. Leap’s CEO said its business would continue to perform well regardless of the transaction, and that the deal could actually “be good for us in the near term” if customers defected for another low-cost provider. The merger might also give Leap a chance to acquire more spectrum if AT&T is forced to divest some of T-Mobile’s bandwidth assets.
