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Sprint Undercuts Rivals With Half-Price Offers

Dan Jones
11/18/2015
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Sprint is trying to grab customers from AT&T, T-Mobile and Verizon Wireless with rate plans that offer half-off on nearly every one of its rival's offerings for the life of a contract, and a chance for potential customers to try its network for free for 28 days this holiday season.

Sprint Corp. (NYSE: S)'s CEO Marcello Claure announced the aggressive re-vamping of his operator's plans on a "National Telephonic Press Conference" on Wednesday afternoon. "There's absolutely no way anybody can beat this price in the industry," Claure declared on the call.

"We believe we're launching today the biggest offer in US history," he said.

Part of the offer is that Sprint will offer 50% off their rate plan to any customers that come to it from one of its big three rivals. So a defector from T-Mobile US Inc. now paying $50 a month for a 2GB plan will get the Sprint equivalent plan for $25 a month. T-Mobile has stated that it will double its data buckets for the same price from November 19, which suggests that Legere and crew knew this move was coming from Sprint. (See T-Mobile Goes OTT With Free Video Streaming.)

Claure denied on the call that the plan was a plain old revamp of the previous "Cut Your Bill in Half" offering with T-Mobile included this time around. "This is very different than the cut your rate in half plan, in that it's very simple and easy to communicate," he said on the call.

"No tricks, no gimmicks, just look at the rate plan," Claure claimed. The offer will be good for the life of a two-year contract and the customer can either leave or move to standard rates if they like the service.

The only rival rate plan not included in the offer is T-Mobile $95-a-month unlimited data plan. Claure said that his customers are already happy with Sprint's own $70 unlimited plan.

The half-off offer will start on Friday, November 20 and run until January 7, 2016. Newcomers have to port at least one number over, but will get the same deal if they port more numbers over too. Claure says that customers from rivals who buy a Sprint phone and aren't happy with the service within 28 days can return the device for a full refund and no restocking fee. [Ed note: Although the small print says that the customer will be charged the $36 activation fee unless the device is returned within three days.]

Although the deal is mainly aimed at gaining new customers from other carriers, Sprint is trying to sweeten the deal for existing customers too. The carrier will offer current customers a tablet -- they don't say which one -- and a year of free service, that's a $360 value, according to Claure. He states that this should help reduce "churn" (customer turnover) for Sprint.

What about the forthcoming $2B Sprint cost shave?
Sprint has said recently that it will cut $2 billion in costs by the end of fiscal 2016. So how will this aggressive offer -- and the associated costs -- help Sprint's bottom line if at all?

CEO Claure insists that the operator has crunched the numbers and the added customers will offset the costs. "This will be accretive in terms of financial performance," he said. (See Sprint to Take $2B Shave and Should CEO Pay Be Part of Sprint's $2B Shave?)

It's the network, stupid!
Claure and his CTO, John Saw, insisted that the greatly improved nature of the Sprint network underpins this whole offer. "We feel we've made dramatic improvements over the last year," Claure said.

The CEO cited figures from The Nielsen Co. , Open Signal and RootMetrics to back up his case. Specifically, Claure pointed to Neilsen data stating that Sprint's LTE network is now faster than either the AT&T or Verizon network.


For more on LTE, visit the 4G LTE content section here on Light Reading.


In part, that is because Sprint has started to combine separate radio channels -- a technique called carrier aggregation-- across its network to offer faster data downloads, with top speeds of over 100Mbit/s, in 77 markets. CTO John Saw dives into the updates in his latest blog.

On the call, though, Saw said that Sprint is trying to "do more and talk less" about network upgrades.

— Dan Jones, Mobile Editor, Light Reading

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MikeP688
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MikeP688,
User Rank: Light Sabre
12/6/2015 | 4:56:34 PM
Re: What was striking to me.....
It is indeed tempting until one reads the "fine print" and realizes the old "adage" that you get what you pay for.    The broader challenge of commodizaztion continues to dodge all though and that's something that has to be considered.   
kq4ym
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kq4ym,
User Rank: Light Sabre
12/6/2015 | 4:36:16 PM
Re: What was striking to me.....
It's always tempting for customers to consider these low price offers, but intertia is sometimes pretty hard to overcome, and it may be few that take up Sprint's plan even though it's good for two years of savings presumably.
MikeP688
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MikeP688,
User Rank: Light Sabre
11/29/2015 | 2:38:36 AM
What was striking to me.....
..was when I saw AT&T giving up Ipad Mini tablets...I know it is a little "off base" but it appears that all the key players are doing what they can in this "Fight to the finish".   What Sprint is trying to do is 'tempting"--but can't help but wonder if it is too little, too late.

 
DanJones
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DanJones,
User Rank: Blogger
11/24/2015 | 2:56:02 PM
T-Mobile's answer to the half-off plan?
danielcawrey
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danielcawrey,
User Rank: Light Sabre
11/23/2015 | 12:51:25 AM
Re: Legere lashes back on Twitter
Sprint may have a faster LTE network than its rivals, but is it as consistent? The company has always had this problem – being spotty in many areas. I have a hard time believing that has changed, and with smartphones relying on consistent data connections in order to be great product, Sprint's got to be able to back up its claims. 
DHagar
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DHagar,
User Rank: Light Sabre
11/20/2015 | 7:10:25 PM
Re: Legere lashes back on Twitter
Dan, if it is calculated, sounds like a smart move if they can execute and recalibrate - if not, it sounds as if it could be too great a risk.  Thanks!
DanJones
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DanJones,
User Rank: Blogger
11/20/2015 | 7:03:47 PM
Re: Legere lashes back on Twitter
Its a (hopefully) calculated risk to try and add a lot of customers in the next two years.
DHagar
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DHagar,
User Rank: Light Sabre
11/19/2015 | 10:35:31 PM
Re: Legere lashes back on Twitter
Dan, so do you think this is a race to the bottom ("of pricing") that they can win, or are they naively pursuing something that is not sustainable?  It sounds too good to be true, plus if they are cutting their resources, one wonders how they are going to successfully execute this intense competition.
DanJones
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DanJones,
User Rank: Blogger
11/19/2015 | 2:44:53 PM
Re: Legere lashes back on Twitter
Right, and in big cities -- they're already deployed in many of them -- 2.5GHz makes total sense because they can bulk up the network coverage with small cells and remote radio heads/C-RAN. But the entire mid-section of the country isn't part of the LTEPlus deployment yet, and that's a more difficult prospect.
Ariella
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Ariella,
User Rank: Light Sabre
11/19/2015 | 9:34:42 AM
Re: Legere lashes back on Twitter
@MendyK I saw mentions of that on social media, but I generally tune out any discussions about sports.
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