Sprint Launches Four-Brand Prepaid Strategy

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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 wants."

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 investors'

conference call

. "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 networking."

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 said.

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 Network.

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.


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