Leap Wireless Introduces Prepaid, No-contract iPhone

Smartphones like the iPhone offer big features, but they also come with a big headache: long-term contracts. Leap Wireless International, however, has scored a major coup in the smartphone wars with the launch of a prepaid, no-contract iPhone, Associated Press reported.

“Launching iPhone is a major milestone for us and we are proud to offer iPhone customers attractive nationwide coverage, a robust 3G data network and a value-packed, no-contract plan,” said Leap founder and CEO Doug Hutcheson.

Leap is offering the iPhone under the Cricket brand name. Two versions of the iPhone are available – the iPhone 4S starting $500, and the iPhone 4 starting at $400. The higher cost of the handsets compared to contract carriers who offer the phones for around $100 is offset by the lower cost of phone service.

The cost of service is $55 per month, which includes unlimited calls, texting and data. The network is slightly slowed, however, after downloading 2.3 gigabytes of data.

This is the first time that the iPhone has been available from a prepaid carrier in the continental U.S.

Leap’s iPhone is only compatible with part of Leap's network. The company is initially limiting sales to metro areas which do support the iPhone: Houston and Austin, Texas; Portland, Ore.; Pittsburgh; Denver; and Salt Lake City. The iPhone will be available starting June 22, covering 70 percent of its base of 6.2 million customers.

Leap contracts with Sprint Nextel to offer service outside of its own network.

The expense of the iPhone adds some substantial risk, despite its wide popularity, but Hutcheson is confident that the venture will succeed. “We wouldn't be doing it if we didn't think it was a money maker,” he told the AP.

Hutcheson also expects the iPhone to only make up 10 percent of sales. Leap also sells Android-based phones for around $100 – the same price contract carriers offer for a subsidized iPhone.

Leap has joined Verizon, AT&T and Sprint in offering the iPhone.

The company’s stock has risen 6 percent on the news. Leap trades on Nasdaq as LEAP.