This hasn’t been a great week for the prepaid wireless sector, but one small yet growing no-contract MVNO plans to step it up a few notches.
Earlier this week, H2O Wireless announced a new $50 monthly plan that includes 250 MB of data instead of the previous 100 MB. But that’s just the tip of the, ah, iceberg. What’s coming in weeks ahead are a $60 plan, a new feature to its broadband service and the addition of WiMAX service based on Clearwire’s network.
It’s all part of a grand plan by H2O to rule the roost, so to speak, when it comes to prepaid services, most of which these days are delivered through its MVNO arrangement with AT&T, although it also has a deal with Verizon Wireless to use its network. Back in April, parent Locus Telecommunications also announced a wholesale agreement with Clearwire that will enable H2O to add 4G-labeled WiMAX mobile broadband service.
As for the current/new $50 plan, H2O Wireless Vice President Jack Woo says a number of factors went into the decision to bump up the available data included in that plan. The MVNO also offers a $40 plan geared toward talk and text, and now the $50 plan offers more for the mobile web experience. In the works is the $60 plan, which he isn’t ready to reveal too many details about just yet, but it will include a larger bucket for data.
Offering so-called unlimited data is “always something we’re looking at,” he says, taking advantage of the fact larger facilities-based carriers are taking those out of their mix, but the no-contract company also has to consider how it fits its business model.
While H2O still sells a lot of feature phones, it’s also already providing service for quite a few smartphones that are coming unlocked from other carriers. Its SIM plan allows for someone with an unlocked GSM phone – whether it be an Android, iPhone or BlackBerry – to come over to H2O when their contract ends. H2O is in the process of adding a Motorola Android 2.2 phone, the Bravo, to its own roster as well.
Whereas prepaid carriers MetroPCS and Leap Wireless/Cricket this week reported second-quarter results that did little to spark enthusiasm from Wall Street, the privately held H2O has seen no slowdown so far this year, according to Woo.
The MVNO has more than 400,000 customers, which might not sound like a lot, but it is growing. “When I look at companies my size or smaller … the ones I’m trying to compete with are far ahead of me right now. From that, I have a lot of room to go after … that’s where my focus is.”
“Strategically, we’re in a very good position. From a value standpoint, we have done a lot to put out a compelling offer… We can enjoy that for now.”
H2O does overlap to some extent with TracFone but not a lot – H2O is in Best Buy, Meijer, Family Dollar, 7-Eleven and Fred’s Discount Stores – and Woo says its biggest competitive overlap probably comes from Simple Mobile, an MVNO that uses T-Mobile USA’s network. Both MVNOs use GSM and share some other similarities.
Ethnic populations in urban areas historically have been a key demographic for H2O. Included with its monthly plans are free international calling whereby customers can make international calls as long as they’re within $10 or $20 values. That means if a customer calls a landline in Mexico, the talk time is about 10 hours’ worth; if they’re calling a cell phone in Mexico, it equates to about three or four hours of talk time.
Its parent, Fort Lee, NJ.-based Locus, has been in the international long distance business for many years, so it’s using its own switches to terminate calls.
Unlike MVNO partner AT&T, H2O doesn’t offer international voice roaming, but it is being added to its mobile broadband product, so customers with a USB stick will be able to use it for their domestic service as well as while traveling abroad. That’s an extension of the 3G network it uses based on its deal with AT&T, but for broadband coverage within regions of the U.S., H2O will be adding service based on Clearwire’s WiMAX network.
For more details on what H2O has up its sleeves, stay tuned. “I’ve got a big vision,” Woo says.
