Feature Article

January 04, 2013

Sprint's New Mobile Subscriber Pitch - Ditch the Contract, Skip the Fancy Subsidized Phone, Pay as You Go

OK, it is not official yet. We haven't had a direct statement or press release from Sprint on it as yet, nor any official Sprint comments, nor even a "no comment" from any Sprint folks. Be that as it may, the street is never the less convinced that Sprint will likely put a plan such as described in our headline into play sometime around January 25th.

We're not exactly sure why Sprint would want to go down this road. At best and at worst, it will put Sprint into direct competition with the likes of Virgin and Boost and other mobile virtual network operators (MVNO), some of which also happen to make use of Sprint's network to provide their own pay as you go services.

The problem we see is one of perception - if Sprint wants to compete head on with Verizon Wireless and AT&T Wireless, it needs to position itself as a premium mobile services player, not as one that is in need of catering to the lower end of the subscriber mobile pool. We had thought that the move to join up with Softbank was one of moving up the ladder, not looking to move back down the ladder.

Most of the information that is available on this possible move comes by way of AndroidPolice.com. They've posted information that points to Sprint offering two specific plans: a smartphone plan for $70 a month, and a feature phone plan at $50. Feature phones? Yep. Below is an image courtesy of AndroidPolice that highlights the four phones these plans will be associated with.

Clearly these are not state of the art devices - in fact they aren't really even mid-level devices - and they aren't exactly bargain priced. Following in the footsteps of T-Mobile's latest brainstorm, the prices in the image above represent the unsubsidized cost for the Sprint-branded devices, which subscribers would need to pony up before setting up their month by month plans.

These month by month plans include unlimited voice, texting, data and voice roaming, though Evolution Data Optimized (EvDO) data roaming when a phone is on a network outside of Sprint's coverage area—is not included and will likely be at lower data speeds. LTE? We don't think so. Credit checks won't be needed; there will be no activation fees, and no late fees. To keep customers coming back each month, before payments are due, customers will be alerted by text message and then three days in advance that payment is coming due.

As a quick refresher, T-Mobile recently agreed to merge with MetroPCS, and has announced that it will no longer subsidize the cost of mobile devices as part of its subscriber plans, looking instead to charge customers the actual cost of mobile devices up front and then charging them much less on their monthly costs for the length of a two year contract. By doing so, T-Mobile is very consciously staking out the lower ground for subscribers.

We're not sure why Sprint believes it needs to cover this ground as well. Even though revenue for the pay as you go segment of the industry increased by about 12 percent last year, we don't see it as a means for Sprint to earn anything other than incremental revenue, likely at the cost of losing any sense of having that premium cachet we noted earlier.




Edited by Brooke Neuman


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