Feature Article

August 08, 2012

Sprint Finds New Customers Through Low-Income Program

With wireless adoption rates at a saturation point, Sprint has come up with a novel way of expanding its customer base. Through its Assurance Wireless brand, the company actively pursues low-income users that are eligible for subsidized phone service through the FCC’s Lifeline program.

The program, which is funded by the telecom industry through the Universal Service program, pays about $9 a month toward the cost of phone service for eligible households. For that monthly amount, Assurance Wireless provides customers with 250 minutes of voice service and 250 text messages.  Customers have the option of paying an additional fee to get more minutes or messages.

A spokesman declined to reveal whether Sprint makes a profit on the service or how many subscribers Assurance Wireless has. But the offering, initially launched in a handful of states in 2009, is now available in 34 states, so apparently it’s been sufficiently successful to merit the expansion.

For people who are unemployed, having a phone number at which they can be reached by potential employers can be critical to finding a new job, the Assurance Wireless spokesman noted. He cited the example of one customer, unemployed for two years without phone service, who found a job four weeks after obtaining a cellphone from Assurance Wireless.

The spokesman also noted, though, that approximately 52 percent of Assurance Wireless customers did not have a cellphone before and nearly 75 percent do not have a landline phone.

Potential customers find out about Assurance Wireless through direct response television and radio ads and direct mail. In addition, the spokesman said Assurance Wireless has “some folks who work with non-profit organizations that work with the demographic we’re talking about.”

Assurance Wireless also issues period press releases with the goal of generating publicity. Anyone who is unemployed that might be interested in the program should use 800-395-2171 to contact Assurance so that Assurance knows the call resulted from its media outreach efforts.

The Lifeline program has been around for several decades and originally targeted only landline service. In recent years some states opened the program up to wireless service – and early this year the FCC opted to make that an option nationwide. At that time, the commission also announced reforms to the Lifeline program aimed at preventing program abuse, including using public information sources to confirm applicants’ eligibility for coverage, creating databases to help avoid duplicate Lifeline payments and cutting off payment for lines that are not used for 60 days. Those moves have helped the FCC free up $43 million since January, part of which the commission aims to use to support a pilot program of a low-income program for broadband.

The Assurance spokesman said Assurance was not affected much by the Lifeline reforms, noting that the company has always had steps in place to attempt to verify that customers are entitled to participate in the program.

Another benefit to Sprint from its participation in the Lifeline program is that it generates interest in the company’s payLo offering, sold under the Virgin Mobile brand, which may appeal to people who are looking for a low-cost plan but do not qualify for Lifeline service.

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Edited by Rachel Ramsey

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