Sprint is taking its fourth prepaid brand to Walmart stores, and it’s got a new twist on the industry’s standard practice of rounding minutes.
Called Common Cents Mobile, the newest member of Sprint’s prepaid portfolio will target budget-conscious consumers 45 and older with a no-frills, 7-cent-per-minute rate and Round Down. Instead of paying for 2 minutes when a call lasts for 1 minute and 46 seconds, customers will pay for just 1 minute.
Sprint believes it’s the only plan of its kind in the United States, according to Bob Stohrer, vice president of marketing for Sprint’s prepaid group. Text messages also are 7 cents each.
Sprint tested a flat 5-cents-per-minute rate and a 10-cent rate with Round Down, and the plan with Round Down tested better even at twice the rate per minute, he says. In the end, the company settled on 7 cents per minute. “We wanted to have the best flat rate out there before we even added Round Down to the equation” and 7 was the number that worked from the standpoint of giving customers the best value and providing profitable customers for Sprint.
The rival prepaid cell phone service of Net10 charges 10 cents a minute. Depending on how many minutes a person buys, per-minute rates from TracFone range from 33 cents per minute to 8 cents per minute, but it recently added a 1500 unit plan that puts the rate at 7 cents with a Double Minute Card.
Ed Finegold, executive vice president of analytics at Validas, says the average consumer pays about 5 cents per minute for postpaid – but that’s on average. “When you look at the individual, it becomes a different story,” he says. “You can have someone who pays 25 cents or 30 cents a minute.” A lot of consumers are scared of overages, so they buy plans with far more minutes than they need, he says.
When just looking at peak calling times, the average postpaid plan comes out to about 7 cents a minute, and when you toss in other factors like free mobile-to-mobile calling and in-network calls, it averages about 12 cents per minute, according to Finegold, whose company provides software to Fortune 500 companies and others to “right size” their billing plans.
Sprint’s new brand debuts May 15 exclusively in more than 700 Walmart stores in markets such as Birmingham, Ala., Detroit, Houston, Orlando, Fla., and more. The company will be kicking off a campaign that will play off the song “Downtown,” replacing it with “Round Down,” and reflect Walmart’s savings narrative.
The offer will include three phones. The LG101 will be priced at $19.77, the Samsung M340 at $39.77 and the Kyocera S2300 at $69.77. Customers can add minutes to their account with $20 or $30 refill cards. Unlimited messaging can be added for $20 per month and data access for $1/megabyte per day.
Sprint’s Boost and Virgin Mobile brands historically have played in the pay-as-you-go or metered space, but those brands have evolved and it’s not a space where they’re going to be most effective, Stohrer says. Last week, Sprint announced that Virgin will be the data-oriented brand targeting the younger gen and Boost will be more voice-centric. The Assurance Wireless brand targets low-income wireless users.
Industry-wide, pay-by-the-minute customers represent about 63 percent of the prepaid market share, and while that number is going down, it still represents a sizable opportunity and one where Sprint wants to compete hard, Stohrer says.
TracFone and other prepaid phone companies have had problems with phone traffickers who buy a bunch of phones, reflash them and sell them overseas. Stohrer says Virgin Mobile had to deal with that problem as well some time ago and came up with a software fix so that the phones can’t be reflashed. Still, like others, it limits the number of phones anyone can buy at one time.
Filed Under: Carriers, Devices
