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Sprint Launches Four-Brand Prepaid Strategy

Warren, N.J.


unveiled a four-brand prepaid
strategy that repositions its Virgin Mobile brand toward young social
networkers and its Boost Mobile brand to talk and text users.

A new unnamed prepaid brand will
focus exclusively on pay-by-the minute service targeted to the
budget-conscious, and Sprint’s current Assurance Wireless brand will remain
targeted to 37 million low-income households who
qualify for free government-paid service.

Distribution of Virgin and Boost
handsets will also evolve with the change, a spokesperson told TWICE.

All four brands are targeted at
specific segments of an increasingly diverse prepaid market, the company said.

“With almost 60 million
people now on prepaid service


the no-contract market has clearly moved beyond the credit-challenged and lower
income segments,” said prepaid group president Dan Schulman in explaining the
four-segment approach. “The prepaid market has changed dramatically, with
customers across multiple demographics and lifestyles demanding a wide variety
of handsets, features, and plans tailored to their specific needs and

The prepaid customer base has
expanded to the point that in the first quarter, more than half of the gross
subscriber additions in the U.S.
cellular market were no-contract prepaid subscribers, Schulman said. He
forecast that about 70 percent of net new subscribers in 2010 will choose
prepaid plans.

Schulman held open the
possibility of more prepaid brands when he said that Sprint’s prepaid portfolio
“will initially be driven by four brands.”

The launch will enable Sprint to
drive prepaid growth without relying on price, he said during a recent


. “We are introducing innovative and attractive offers for
specific groups of customers based on usage and habits — from those who are on
limited budgets and use their phones infrequently to those who want high-end
devices to use for all their communications, entertainment and social

Virgin position:

Under the Virgin Mobile
brand, Sprint will target youthful consumers “who use text and data services to
power constant connection with their social networks,” the company said. All of
the new Virgin plans, available May 12, will feature unlimited messaging,
email, data and Web access, plus a select amount of voice minutes, starting at
$25 a month and a new lineup of high-end handsets.

The Virgin brand will continue to
offer pay-by-the-minute service, but Virgin’s marketing will concentrate on the
monthly plans, a spokesperson told TWICE.

The Virgin phones and the new plans
will target youth and young adults whose wireless communications habits have
changed dramatically since only 2007, Sprint said. Nielsen data found that postpaid
mobile subscribers ages 18 to 34 reduced their number of minutes they talk on
the phone by more than 10 percent while the number of messages they sent grew
more than 150 percent and their data usage grew more than 1,800 percent, Sprint

On May
12, Virgin Mobile will launch three “Beyond Talk” plans for its
repositioned service. The $25 plan will be the industry’s lowest
price-point plan for unlimited messaging, email, data and Web access and will
include 300 minutes of voice calling per month, the company said. A $40 plan
adds 1,200 minutes of voice per month, and a $60 plan includes unlimited voice.

Virgin will also offer BlackBerry
data service for the first time. To each of the three plans, consumers will be
able to add BlackBerry service for an additional $10
per month.

Virgin will continue to offer its
data-only Broadband2Go service launched last year
with wireless modem.

To go with the new plans, Virgin
will offer four phones: The BlackBerry Curve 8530 smartphone at $299, the LG Rumor
Touch at $149, the currently available QWERTY-equipped LG Rumor 2 at $89.99,
and the Kyocera QWERTY-equipped Loft at $69.99.

The Curve 8530 smartphone features
full QWERTY keyboard, optical track pad, Wi-Fi connectivity, dedicated media
keys and 2-megapixel camera. The LG Rumor Touch will be the first full-touch
handset from Virgin Mobile. The LG Rumor 2 was launched last year by Virgin.
The QWERTY-equipped Kyocera Loft features embedded instant messaging and email
application, threaded SMS and MMS messages in a single inbox, Google Maps, and
other navigation applications.

Boost positioning:

Under the Boost Mobile brand, Sprint will continue
its recent focus on its current monthly unlimited pricing plans, which are
targeted to consumers who talk and text but also include unlimited
handset-based Web access. A $50 unlimited plan recently added unlimited 411
calls, email and instant messaging on top of the previously offered unlimited
talk, text and Web access. The brand, however, will continue to offer pay-as-you-go
plans, the spokesperson said.

Boost phones operate either on
Sprint’s CDMA network or, for push-to-talk users, on the Nextel National

New brand:

Next week, the Sprint company will unveil the name of
its new pay-by-the-minute brand, targeted to
budget-conscious customers who spend less than $30 per month. These “basic
communicator” customers “just need a basic, no-frills phone service,
don’t depend on their phones for everything, talk and text less frequently, and
focus on how much they pay by the minute,” a spokesperson explained. The new
brand will launch sometime in May in about 16 markets
to start.

About 63 percent of the prepaid
customer base pays by the minute or by the day, the company noted.

Assurance brand:

For low-income households, Sprint will expand
availability of its Assurance Wireless brand to about 25 states by the end of
the year. The brand, launched last year and available in five states, offers
free wireless service targeted under a government program to 37 million eligible
low-income households, often eligible for government programs such as the
Supplemental Nutrition Assistance Program (SNAP) or food stamps. These users
receive a free cellphone and 200 free minutes of airtime for local and
long-distance calling per month.

Distribution plans:

Distribution of the Boost and Virgin brands
will evolve under the new strategy, a spokesperson told TWICE. “You’ll begin to
see more and more prepaid products in the Sprint stores,” she said. “Select
Sprint stores carry Virgin Mobile and Boost Mobile handsets, and that will
increase.” Sprint “certainly expects our prepaid products to benefit from
Sprint retail distribution as we begin to educate consumer that they can find
prepaid products at Sprint as well,” she said.

 Boost phones will continue to remain in
independent and national retailers, which currently include Best Buy and
RadioShack. Likewise, Virgin-branded handsets
will continue to be distributed through major retailers and drug and
convenience stores, but Virgin handsets will also be made available to Boost’s
indirect retailers as well, she said.

 Sprint also operates Boost-branded stores,
some of which also carry Virgin products, and the company plans to continue
opening new Boost stores “with an eye toward locations that would also benefit
from Virgin Mobile product,” the spokesperson continued. “We expect to see more
merged product stores in the second half of the year, with some more
Boost-dominant and others highlighting Virgin Mobile more,” she explained.

 “We are going through an evolution of
co-branding the stores, although in keeping with the multi-branded strategy,
some stores may be more Boost Mobile-dominant, whereas some may be more Virgin
Mobile-dominated.” That could vary by ZIP Code, she said.

Sprint ended its first quarter
with about 11 million prepaid customers, second only to Tracfone, an MVNO that
mainly markets pay-by-the-minute plans.