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Sprint Plans More Bundled-Content Offers

Sarah Thomas
5/19/2014
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After some very early success with its partnership with Spotify, Sprint is planning to offer additional bundled content add-ons to eke more value out of its installment billing and "Framily" plans.

Speaking Monday morning at the JP.MorganChase Global Technology, Media and Telecom Conference, Sprint Corp. (NYSE: S) CFO Joe Euteneuer told attendees that he wants to bring more types of content to the forefront for Sprint customers and offer them as add-ons to their data plans.

The offers would look similar to the deal Sprint struck with Spotify last month that Euteneuer said has done really well in its first two weeks. Sprint helps market and promote Spotify and offers the music service free to those customers on a Framily plan for up to six months, followed by a discounted rate of $7.99 per month after that if the Framily has less than five people in it and $4.99 if it has six to 10 members. Euteneuer said this type of flexibility in billing "establishes the foundation of where we're going to go forward." (See Sprint Launches No-Sharing 'Framily' Plans.)

The carrier also offers installment billing, which has caused its service ARPU to go down, but device revenue to grow. The CFO suggested bundled deals like the Spotify offer will help it make up some of the service revenue its losing from installment billing, which 29% of its customer base now uses. (See Sprint Reports Q1 Loss of $151M.)

"The most important piece of installment billing is, one, customers are now paying for their phones 100% over 24 months, and we have eliminated the subsidy, which has a big help to the bottom line," Euteneuer said, adding that Sprint will "then continue to create value through other Spotify type offers."

Future content deals will likely branch out from music, but interest in mobile music has been growing lately, making it a good place to start. Apple Inc. (Nasdaq: AAPL) is reportedly acquiring Beats, which is a partner to AT&T Inc. (NYSE: T). Analysts believe the deal could spur more M&A and action in the mobile music space. (See Apple Buying Beats for $3.2B: Dr. Dre & Tyrese.)

— Sarah Reedy, Senior Editor, Light Reading

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sarahthomas1011
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sarahthomas1011,
User Rank: Light Beer
5/20/2014 | 10:45:02 AM
Re: toll-free too?
This will be big for Spotify, which has struggled to expand in the US. I wonder what the terms of the deal are -- probably pretty favorable to justify partnering with Sprint rather than targeting another US tier one.
danielcawrey
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danielcawrey,
User Rank: Light Sabre
5/19/2014 | 5:04:37 PM
Re: toll-free too?
I have never thought that Spotify would be able to support itself through advertising alone. Tying the service with devices on the go is a great idea: It's like an iPod (remember those?) with every song you could ever want. 

I'm positive that the Apple-Beats deal will leverage the AT&T partnership. After all, isn't AT&T where the iPhone made its initial debut?

 
sarahthomas1011
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sarahthomas1011,
User Rank: Light Beer
5/19/2014 | 5:02:23 PM
Re: toll-free too?
It's a good way to get more people to sign up for Framily plans too, although I still think it'd be hard to find 9 other people to join your cellular plan if it's not your direct family members...
kq4ym
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kq4ym,
User Rank: Light Sabre
5/19/2014 | 4:52:44 PM
Re: toll-free too?
Sprint seems always ready to spice up their offerings and the bundled content is most likely a growing trend. It's a great way to cross-promote other services while enticing customer who think they're getting something free, but of course it's added revenue eventually to the providers.
sarahthomas1011
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sarahthomas1011,
User Rank: Light Beer
5/19/2014 | 11:11:14 AM
Re: toll-free too?
Also, AT&T hasn't said if Beats will count against the data cap or not. That could be a strong differentiator for it. It's a different service from Spotify but could still be a competitor since it's in the same camp.
sarahthomas1011
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sarahthomas1011,
User Rank: Light Beer
5/19/2014 | 11:10:34 AM
toll-free too?
The content partnership with Spotify should help Sprint, but it's a bigger deal for Spotify, which needs to grow its presence in the US. This is different from what AT&T is doing with its toll-free data in that it still counts against the data cap, but I wonder if that's a next step for Sprint with some of these deals.
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