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Virgin Mobile USA to Crunch iPhone Data Costs

Virgin Mobile USA Inc. (NYSE: VM) beat out fellow Sprint Corp. (NYSE: S) subsidiary Boost Mobile to become the second prepaid carrier to unveil plans to offer an unsubsidized iPhone 4 and 4S. (See Pre-Paid iPhone Parade: Can the Networks Cope?)

Virgin said Thursday that it will begin selling the iPhones on June 29, one week after regional operator Cricket Communications Inc. begins offering Apple Inc. (Nasdaq: AAPL) smartphones. (See Cricket's iPhone Leap of Faith.)

Sprint's prepaid arm plans to undercut Cricket in data pricing, although it's asking a bit more for the unlocked device. The 16GB iPhone 4S will sell for US$649 and the 8GB iPhone 4 will cost $549. Both will have the option of a $30 per month unlimited data plan after a $5 discount for customers who register for automatic payments. Virgin customers will also have the option of turning the iPhone into a mobile hotspot for $15 more per month.

Why this matters
Boost Mobile was rumored to be the next prepaid carrier to get the iPhone, which means that it may not be far behind Virgin. This should ultimately be good news for Sprint, which will presumably get the next generation of Apple smartphones later this year. Sprint now has an unlimited iPhone, a low-cost prepaid iPhone and will get the Long Term Evolution (LTE) iPhone -- products that should appeal to all segments of its customer base, and give Sprint more options to help fulfill its $15.5 billion commitment to Apple.

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

sarahthomas1011 12/5/2012 | 5:30:54 PM
re: Virgin Mobile USA to Crunch iPhone Data Costs

I'm curious what people think on if prepaid customers will pay this much upfront. Is the lure of the iPhone enough for them? These are customers who are usually so cash-strapped that pay in the store with cash every month. I don't know if they'll be thinking long-term enough to realize the savings over the life of the phone. $650 up front is a lot...

sarahthomas1011 12/5/2012 | 5:30:54 PM
re: Virgin Mobile USA to Crunch iPhone Data Costs

Sprint could've been in trouble if just Cricket got the prepaid iPhone, but its brands getting it too is good news. $30 per month for data is a great deal, even with the higher upfront cost.

krishanguru143 12/5/2012 | 5:30:53 PM
re: Virgin Mobile USA to Crunch iPhone Data Costs



That has been my thinking as well.  People that go to Cricket do so because of the monthly service price, not the service.  Looking at Cricket in various markets where they have their own network, the data speeds are notorious to say the least.  In some areas, the peak never went over 1.5Mbps 100% of the time and these tests were run for a week at all hours of the day.  The other carriers were tested at the same time.  The average that many Cricket customers see is .3Mbps down and .1Mbps up.  Even EDGE would get better speeds than what the 3G from Cricket can provide.  Virgin Mobile will probably see more sales than Cricket as at least you will get acceptable transfer rates compared to Cricket.  The cost is still a factor though.  With Cricket and Virgin both selling the phone unsubsidized and yet the cost difference is $149, it almost appears as if Virgin is adding points to the price.  So the customer is “pre-paying” some of the service upfront through the price of the phone in order to lower the price of the service.  With the data plan being $20 to $25 (depending on if you do automatic payments) then after 6 to 7.5 months, you break even.  After that you start to save money; that is until the next version is released.




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