The wireless industry seems like it’s been characterized by a race to the bottom as of late, and at least one carrier CEO is speaking out to note that such a model is unsustainable.
Sprint head Marcelo Claure on Monday argued carriers will need to rip off the band-aid and raise prices in the coming years.
“In order for this industry to be healthy, I think eventually all carriers will have to increase prices in next few years as data consumption increases,” Claure said.
According to Claure, Sprint has instituted two price increases for unlimited data plans on his watch. Those $10 bumps have not affected churn, he said, so he remains confident in what the future holds.
In the short term, though, Sprint is pushing hard to woo consumers, particularly pushing offers into the market geared at getting families to give the carrier a chance to show off its improved network. One such offer is the carrier’s $90 for five lines of unlimited promotion. While the offer seems drastic, Claure said it’s a very calculated balance.
“We don’t capture a lot of three, four, five (line) customers. So to us we look at it like two for $90,” he said. Claure noted that any customers on lines three through five the carrier can pull in will pay full price after one year. But the whole point, he said, is to price service competitively enough to provide an incentive for family switchers. Claure pointed out families tend to stay longer with one carrier and have a better churn profile than single line customers.
“As we bring customers, they come and they’re willing to stay, that’s why last year was the best churn the company has had in many years,” he said. “In this case, we’re moving entire families from Verizon, AT&T, and T-Mobile. They come for one year free, lines three, four, and five, and then after that they stay.”
But Sprint is also looking at a regeneration of its prepaid segment.
On that front, Claure said Sprint has a three-pronged strategy: have competitive rate plans (that aren’t beat by its Metro PCS brand), have competitive handset pricing, and grow distribution. The long-term goal is to move those prepaid customers to Sprint’s postpaid base, he said.
