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Virgin Mobile Heats Up Prepaid Mobile Broadband Wars

Kevin C. Tofel — Wed, 25 Aug 2010 21:00:26 +0000

In a bid to grab new customers, Sprint’s Virgin Mobile USA has reduced the price of its highest capacity prepaid unlimited mobile broadband service to $40 per month with no contract. That compares favorably to Verizon’s new prepaid plan at twice the price with a 5 GB limit over 30 days. Along with the price reduction, Virgin Mobile USA is retaining its $10 plan that provides 100 MB of mobile data over the course of 10 days.

Sprint’s main CDMA competitor, Verizon, has offered prepaid mobile data since November of last year, but the pricing is much higher than that of postpaid plans as the carrier would rather lock consumers into a two-year contract. Verizon, too, just modified its prepaid mobile data plans today, with the smallest plan boosted to 100 MB. You’ll need to use it up quickly however, because for $15, it only lasts for a day. And when Fierce Wireless caught wind of a potential new 5 GB plan last night, I confirmed it on the Verizon site today: The new prepaid plan currently costs $80 for a month of data, or double the new Virgin Mobile USA offering.

Compared to the $60 per month that I currently pay Verizon Wireless for service on my MiFi, the new Virgin Mobile USA plans are a steal. The benefit that may entice other consumers is the lack of a contract; while you have to purchase a $150 MiFi or $80 data stick up front from Virgin Mobile USA, you don’t have to pay for data when you don’t need it. Luckily, I’m long past my contract date and on a month-to-month plan, so I don’t have to fear a hefty early-termination fee.

Aside from consumers winning with a another cheap mobile broadband choice, Sprint has much to gain through the cheaper Virgin Mobile USA mobile broadband plan if it attracts customers. The carrier purchased Virgin Mobile USA in July of 2009 for $483 million, and the prepaid brand has brought Sprint needed cash as both its ARPU and number of subscribers have been declining. In the most recent quarter, Sprint did grow its subscriber base for the first time in three years, but still reported a net loss of $760 million.

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Sprint Targets Growing Prepaid Market With Aggressively Priced Plans

Kevin C. Tofel — Thu, 06 May 2010 17:00:29 +0000

Sprint today announced cheaper prepaid plans through the Virgin Mobile USA brand it purchased last July for $483 million, a move aimed at attracting more of the growing number of wireless customers choosing such payment plans.

Three new “Beyond Talk” plans begin at $25 per month and all include unlimited messaging, data, email and web access. The base plan includes 300 voice minutes, while customers can move to a plan with 1,200 minutes for $40 per month or choose unlimited voice for a total of $60 per month. BlackBerry service is available for $10 extra per month to be used with the newly available BlackBerry Curve 8530, priced at $299.99.

Although it’s often difficult to compare handheld service plans due to variances in the features and voice limits, the new Beyond Talk plans compare favorably to most traditional postpaid contract plans offered by Sprint’s competitors — and even that of Sprint itself. Here’s a quick comparison of the new, $60 unlimited Beyond Talk prepaid plan to unlimited contract plans, with data plans based on non-smartphones:

	Virgin Mobile USA	Sprint	AT&T	Verizon Wireless	T-Mobile
Unlimited voice, text, web	$60	$99.99	$104.99	$99.99	$99.99
Plan name	Beyond Talk	Simply Everything	National Plan	Unlimited Talk	Even More Talk

So why the aggressive push? Lately, growth in the U.S. cellular market is in prepaid, not postpaid, so Sprint is trying to grease the Virgin Mobile USA machine it spent nearly half a billion dollars to acquire. According to research from the New Millennium Research Council (NMRC), new prepaid wireless customers in the U.S. during the last quarter of 2009 outnumbered new contract customers for the first time ever — 65 percent of the 4.2 million new customers came from the prepaid market.

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Wal-Mart Crashes the Prepaid Party

Colin Gibbs — Wed, 14 Oct 2009 20:30:32 +0000

The cutthroat prepaid market will get even more competitive this weekend when Wal-Mart begins offering no-contract plans at bargain-basement rates. The planet’s largest retailer said it will roll out TracFone Wireless’ Straight Talk, which offers a $30-a-month plan as well as a $45 monthly rate that includes unlimited text messaging and mobile web access.

But the big question in the prepaid segment is just how cheap plans can be and still be profitable — particularly when it comes to delivering data. Text messaging doesn’t command nearly as much bandwidth as other data applications, and TracFone’s antiquated lineup of phones surely limits its customers’ use of the mobile web, which can weigh down the network.

The recession has sparked a surge of consumer uptake of cut-rate prepaid services (GigaOM Pro, sub. required), and service providers such as MetroPCS and Leap Wireless have engaged in brutal price wars to increase their share of the growing market. (Prepaid has become so attractive, in fact, that Stacey has taken the plunge.) Sprint is hoping to join the mix, too, with its $483 million acquisition of Virgin Mobile USA. Wal-Mart’s move could up the ante in two key ways: Not only do the price points undercut most competitors’ offerings, the chain will sell Straight Talk at more than 3,200 stores nationwide.

But as the race to the bottom approaches the finish line, the prepaid guys will have to choose between offering older handsets that aren’t optimized for data consumption or surrendering in the prepaid price war. I’m sure plenty of users don’t mind phones with limited memory and shoddy mobile browsers — in fact, some of my friends are very happy with those kinds of devices — but offers of “unlimited mobile web access” won’t be nearly as compelling when they’re packaged with dated handsets.

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Sprint-Virgin USA Merger Gets FTC OK

Om Malik — Tue, 25 Aug 2009 14:31:37 +0000

Sprint’s $483 million purchase of prepaid phone services giant, Virgin USA, has been approved by the Federal Trade Commission (FTC). The deal still needs some minor clearances from the Federal Communications Commission. The megamillion-dollar purchase highlights the importance of the prepaid and budget segments of the U.S. cell phone industry, especially in light of the recent economic downturn.

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Virgin Mobile Boosts Profits With High-End Phones

Stacey Higginbotham — Mon, 10 Aug 2009 14:51:34 +0000

Virgin Mobile USA, which recently agreed to be acquired by Sprint for $483 million in stock, said today its sales for the second quarter were largely unchanged from the same period a year ago, at $290 million. However, its profits nearly quadrupled, to $21.8 million from $5.5 million in the second quarter of 2008. The company’s fortunes rose along with its hybrid cell phone plans, aka its monthly service plans, whose subscribers generate 15 times the value of pay-per-minute customers, according to Virgin CEO Dan Schulman.

Virgin introduced a $49.99 unlimited plan during the quarter, matching the competition, which represented 21 percent of all gross adds in May and June, but also lowered Virgin’s average revenue per user to $18.98, caused by customers trading down from the $79.99 unlimited plan. Customers taking the $49.99 unlimited offer have an ARPU of $56. The mobile virtual operator, which buys minutes on the Sprint network, also credited its profits to its customers trading up to data-ready phones. Schulman said in the release:

“Supporting this strategic customer focus is the sale of higher-priced handsets, which are associated with higher data usage, better churn, and significantly higher lifetime value. Our sales of handsets priced at $50 and above leapt to 25 percent of total sales from 15 percent in just one quarter, reflecting the success of our strategy and our commitment to high quality growth.”

Virgin is following in the footsteps of the big carriers, all of which have been boosting revenue and average revenue per user with phones that encourage data use. Even other prepaid companies such as Metro PCS are trying out high-end phones in the hopes that data will help boost their top line. And for prepaid carriers, offering high-end phones is a bit more of a stretch because most customers buy prepaid phones without a subsidy, turning a $100 smartphone into a potentially $400 purchase. Virgin, however, offers some of its high-end phones with a contract aimed at offsetting the cost. Virgin ended the quarter with 5 million customers, having added 535,558 during the April-June period, and saw its churn decrease to 5.3 percent.

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