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Sprint Segments Its Prepaid Subscribers

Sprint Corp. (NYSE: S) may be struggling on the postpaid side of wireless, but it’s embracing its fated role as a predominantly prepaid provider with four separate brands targeting four separate demographics.

The third largest US carrier today elaborated on its prepaid strategy, designed around segmenting a growing prepaid market with specific value propositions.

Sprint’s strategy comes in response to a steadily changing -- and growing -- prepaid market. Prepaid users were once synonymous with teens or credit-challenged, lower-income consumer segments, but the worse the economy has gotten in the past few years, the more consumers have begun to adopt prepaid.

Dan Schulman, the recently appointed president of Sprint's prepaid group, noted that the first quarter of 2010 in the US saw more than half of the mobile gross additions going to prepaid. Sprint, which lost 578,000 contract customers in the first quarter but added 348,000 prepaid users, expects about 70 percent of the net adds in 2010 to opt for contract-less service as well. (See Sprint Pins Hopes on WiMax Phone.)

Schulman says Sprint will respond to the changing makeup of prepaid users with four brands, none of which features the Sprint name.

    1) Virgin Mobile USA Beyond Talk: Virgin will continue to serve its original customer base of social-networking-heavy text and data users with three new plans next week under the Beyond Talk name. The plans include unlimited messaging, email, data, and Web, and promise no incremental fees or taxes. They range from a $25 per month data plan to $60 per month for unlimited data and voice. BlackBerry data service can be added to any of Beyond Talk’s plans for an additional $10 per month.

    2) Boost Mobile: Boost’s popular $50 monthly unlimited plan will get more all-inclusive with unlimited 411 calls, email, and instant messaging.

    3) Assurance Wireless: Targeting the lowest-end of subscribers, Assurance was launched late last year as a free wireless service for eligible low-income households. The plans include a free cellphone and 200 minutes of airtime for local and long-distance calling every month. The service is currently available in five states, but Sprint plans to expand it to around 25 before the end of the year, pending approval in each.

    4) A new pay-by-the minute brand: Sprint’s final customer segment comes in the form of a new pay-by-the-minute brand aimed at those consumers who spend less than $30 per month and focus on wringing all the value they can out of each minute. Sprint says that around 63 percent of the no-contract market is already choosing to pay by the minute or the day.

Along with the new plans, Sprint also introduced a new line of handsets to the Virgin Mobile brand, including the BlackBerry Curve, LG Electronics Inc. (London: LGLD; Korea: 6657.KS) Rumor Touch, LG Rumor 2, and Kyocera Corp. (NYSE: KYO) Loft.

Whitey Bluestein, prepaid analyst and president of Bluestein & Associates, was impressed with Sprint’s strategy, noting that the carrier understands branding better than anyone in the industry today. “Sprint's prepaid strategy reflects a thoughtful survey of the prepaid market, how its brand portfolio fits, and where Sprint is going,” Bluestein said in an email. “It is not just something for everybody, although it is that, in a good way and done intelligently.”

— Sarah Reedy, Senior Reporter, Light Reading Mobile

sarahthomas1011 12/5/2012 | 4:37:03 PM
re: Sprint Segments Its Prepaid Subscribers

The Boost and Virgin target demographics seem pretty similar to me. It's interesting that Sprint owns two clearly competitive companies. I guess it doesn't care which subscribers use as long as they're subscribing.

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