Sprint Undercuts Rivals With Half-Price Offers
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.
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