Sprint's Boost To Offer $50 Flat-Rate National Calling Plan
January 14 2009 - 8:11PM
Dow Jones News
Sprint Nextel Corp.'s (S) youth-oriented Boost Mobile wireless
service plans to offer a $50 monthly unlimited nationwide calling
plan in a bid to severely undercut the competition.
Boost Mobile will launch the plan, which includes unlimited text
messages, mobile Web and walkie-talkie service, on Jan. 22, company
executives said Wednesday. It represents the most aggressive move
to win customers by Sprint, which has struggled to keep subscribers
from fleeing its core service.
The Overland Park, Kan., company is looking to Boost to pick up
the slack. The offering's price is about half the $99 flat-rate
plan offered by the other national carriers. Sprint itself offers a
$99 "Simply Everything" plan that includes unlimited calling, text
messages, faster Web surfing and other bells and whistles.
"We certainly believe this [new offering] will be appealing to a
certain segment of the post-paid customer base," said Matt Carter,
president of Boost. He believes T-Mobile USA subscribers are
particularly vulnerable. T-Mobile is a unit of Deutsche Telekom AG
(DT).
Boost has traditionally targeted younger customers, but with the
cheaper plan, the service will go after consumers looking to save
money. While its primary goal is to attract pre-pay customers,
Boost is hoping to win over some consumers who traditionally sign
long-term contracts. It plans to launch an advertising campaign to
shift its message from youth to value.
"We're retaining a youthfulness, but we'll consciously change
our target market," said Neil Lindsay, vice president of marketing
for Boost. "We have to change the way we go to market without
alienating our traditional base."
Boost may get some takers as consumers look for new ways to
tighten their belts amid a faltering economy.
Boost Mobile previously offered an unlimited service that was
limited by region, which put it in direct competition with MetroPCS
Wireless Inc. (PCS) and Leap Wireless's (LEAP) Cricket, which offer
similarly priced flat-rate plans. But Boost's new plan won't have
regional restrictions, allowing for nationwide coverage putting it
in competition with the other national players.
Comparable plans from MetroPCS and Leap are in the $60 range.
The $50 monthly rate includes other charges such as the telecom
tax. The only additional charge comes from the state sales tax.
There are, however, trade-offs for the service. People looking
to join Boost Mobile will have to switch to the Nextel network,
which means buying a new phone not compatible with other networks.
There are a limited number of phone choices, all from Motorola Inc.
(MOT), although Carter said more phones are in the works. Phones
runs between $20 and $100. Because there are no contracts, there
are no subsidies for the handsets.
While there is unlimited Web access, the network connection is
comparable to dial-up speeds.
In addition to the monthly flat rate, Boost offers the option to
pay $1 a day, which includes a charge of 10 cents a minute during
the day, and unlimited night and weekend minutes.
Carter said Sprint's core service differentiates itself through
the higher network speeds and better handset selection.
"We believe this is complementary to Sprint's overall value
message," Carter said.
The plan is part of Sprint's decision to back the Nextel network
after failing to find enough suitors for the business. The
company's failure to maintain the network over the past few years
led to a mass exodus of Nextel customers. But more recently, Sprint
has improved the quality of the service and now has excess capacity
on the network, which it hopes to fill with new Boost Mobile
customers.
-By Roger Cheng, Dow Jones Newswires; 201-938-2020;
roger.cheng@dowjones.com
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