Cricket's iPhone Leap of Faith

Leap Wireless International Inc. (Nasdaq: LEAP) subsidiary Cricket Communications Inc. became the latest carrier to nab the iPhone 4 and 4S Thursday, but unlike Apple Inc. (Nasdaq: AAPL)'s other partners, it's offering the phones on a pre-paid basis.

Starting on June 22, Cricket will sell the iPhone with its $55 "unlimited" data plan that slows speeds at 2.3GB. The plan is $25 to $65 per month cheaper than its rivals offer, but the phone itself will set users back nearly $300 more at $500 for the 16GB iPhone 4S and $400 for the iPhone 4.

Why this matters
Cricket is the first to offer a pre-paid iPhone, but it paid for the privilege. According to its Securities and Exchange Commission (SEC) filing, the carrier committed to a minimum volume worth $900 million over three years. That's a big bet considering its serving a price-sensitive customer base. The iPhone will also be limited to Cricket's regional CDMA footprint and won't work nationwide via its Sprint Corp. (NYSE: S) arrangement.

Those are big limitations, but Sanford C. Bernstein & Co. Inc. analyst Craig Moffett says Cricket's gamble will likely pay off. He notes that Cricket didn't have to commit to the same outlandish minimums that Sprint had to, and it's not changing up its low-subsidy business model much for the phone either. (See Sprint Losses Mount on 4G Upgrades & iPhones and Sprint Sees iPhone Subsidies as Necessary Evil.)

"The lifetime cost of owning the device could very well be lower than post-paid iPhone plans, giving Leap the opportunity to poach low-end post-paid subscribers from the national carriers," Moffett writes in a research note. "There are pros and cons potential customers will have to consider (speed on CDMA compared to HSPA, data limits, geographic coverage, brand, etc.), but Leap's 3G network is relatively solid and should put them in a good position to compete on this front."

Oh, and did we mention T-Mobile US Inc. still doesn't have Apple's iconic device?

For more
— Sarah Reedy, Senior Reporter, Light Reading Mobile

sarahthomas1011 12/5/2012 | 5:31:27 PM
re: Cricket's iPhone Leap of Faith

I doubt a lot of people switch to Cricket for the iPhone, but could be an attractive upgrade for a lot of its customers. Seems iike it'd hurt Sprint, if any carrier. Even if it doesn't poach customers, it won't help it met its volume requirements.

sarahthomas1011 12/5/2012 | 5:31:26 PM
re: Cricket's iPhone Leap of Faith

No, I believe it's limited to Leap only. It's only selling it Houstin, Austin, Portland, Pittsburg, Denver and Salt Lake City to start.

moon_shot 12/5/2012 | 5:31:26 PM
re: Cricket's iPhone Leap of Faith

It doesn't work on Sprint's network as stated in the article, but will it work on the MetroPCS network under the current Cricket-MetroPCS roaming agreement?

krishanguru143 12/5/2012 | 5:31:22 PM
re: Cricket's iPhone Leap of Faith

"but Leap's 3G network is relatively solid and should put them in a good position to compete on this front."


Makes me wonder if they ever used it?  While I have never used it, I have seen some statistics that say otherwise.  In the Houston area, one call center saw more dropped calls from Cricket than all of the carriers combined.


Cricket is also a favorite with the low income types; where are they going to get $400 to $500 to spend on a phone?  They also better not be on welfare either.

krishanguru143 12/5/2012 | 5:31:20 PM
re: Cricket's iPhone Leap of Faith

What is actually more amazing, that Apple is allowing Cricket to sell the phones.  Apple is all about the end user experience and every test I have seen, Cricket pretty much comes in dead last.  I have seen results that show that Cricket in some areas is below 1.5Mbps 100% of the time and many cases where the average download speed is .4Mbps or less and the average upload speed is .1Mbps.  No wonder why they allow “unlimited” and I would hate to see what they throttle you too when you exceed 2.3GB.

sarahthomas1011 12/5/2012 | 5:31:11 PM
re: Cricket's iPhone Leap of Faith

I just spoke with Cricket to clarify, and the iPhone will roam on to any of it's roaming partners' networks, so that includes Sprint and MetroPCS. It just can't sell the phone in AWS markets, so no iPhones in Chicago, for example. This certainly broadens the customer base.

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