Picture the scene from any typical family road trip vacation, except Sprint CEO Dan Hesse is in the role of the father sitting behind the wheel. The squabbling siblings in the back seat? How about Sprint progeny Boost Mobile and Virgin Mobile.
The two wireless carriers each sell their own brand of wireless service that runs over the Sprint network. They have broken out in a new competitive skirmish as each is reaching out to customers with $50 unlimited calling plans.
In large part these initiatives initially were in response to other rivals such as MetroPCS, a regional carrier that has been seeing its customer rolls swell in these troubled times as more consumers find lower-priced flat-rate plans appealing.
"The move aligns Virgin Mobile against the likes of unlimited plan rival MetroPCS, which on Tuesday reported a 51 percent customer increase in the first quarter of 2009 compared with a year ago," wrote Scott Martin at RedHerring.com.
But like a brother and sister picking, poking and generally annoying each other in the back seat of a car on a long trip, this new Virgin Mobile plan also aims squarely at the company's rival in the Sprint family, Boost Mobile.
"Virgin Mobile's decision to slash the price of its unlimited calling plan is another indication that there is a war at the $50 price point going on among operators such as Sprint Nextel's Boost Mobile prepaid unit, MetroPCS and Leap Wireless. Indeed, Virgin Mobile spokeswoman Jayne Wallace said the move was "definitely a response to the marketplace," wrote Phil Goldstein at FierceWireless.com. "The battle caught fire following Boost Mobile's launch of unlimited voice, text messages, mobile web access and Nextel walkie-talkie service in January for $50. Tier 1 operator T-Mobile USA launched a $50 per month unlimited voice plan for select customers in early March. And Leap and MetroPCS have long offered a variety of unlimited monthly plans ranging from $35 to $50 per month."
Monica Alleven at WirelessWeek.com wrote a piece headlined "Prepaid Wars Escalate As Virgin Mobile Cuts Prices"
Sprint was a co-founder, along with Richard Branson's Virgin Group, in the Virgin Mobile venture. It has more than 5 million customers, accounting for the bulk of the 8 million wholesale customers Sprint includes in its total base of more than 49 million subscribers.
When Sprint bought Nextel in 2005, it also acquired Boost Mobile. As of the end of 2008, Boost had about 3.6 million prepaid subscribers. For a variety of reasons, the Sprint unit had lost momentum and saw customers slip last year.
Boost's prospects are much brighter now. It is included in a new resurgence campaign backed by Dan Hesse himself.
Boost is receiving prominent attention in Sprint's current marketing pushes and just recently launched a $50 calling plan of its own.
Virgin will respond on April 15 with a "no-annual-contract unlimited calling, anytime, anywhere in the United States" calling plan for $49.99 a month.
The company also notes that it has plans such as one with 300 anytime minutes and 1,000 7PM Nights/Weekend minutes for $29.99.
"Prepaid offers better value, rates and flexibility with more advanced handsets than ever before," said Dan Schulman, CEO, Virgin Mobile USA. "No-annual-contract plans lead the wireless industry and Virgin Mobile USA's competitive rates with no long-term commitment provide a viable alternative to contract plans. With our inexpensive handsets, the cost of entry into Virgin Mobile wireless service is often much less than that of our large and smaller competitors."
Oh yea!, Boost Mobile responded.
Indeed, Boost poked back with a statement saying that "Not all unlimited prepaid cell phone plans are created equal. The recently launched Virgin Mobile $49.99/month plan can actually cost consumers closer to $72/month when fees for text messaging, Web and telecom taxes are added in. Alternatively, consumers get superior value – a savings of more than $240 a year – with Boost Mobile’s flat-rate prepaid plan, which offers unlimited nationwide talk, text and multimedia messaging, wireless Web access and nationwide Walkie-Talkie that reaches more than 274 million people in more than 15,800 cities across the U.S. for an all-inclusive price of $50/month."
The Virgin plan, said Matt Carter, President at Boost Mobile, requires extra charges for text messaging.
“Our customers are very connection-centric, which means they use their phones to not only talk, but also to send texts, find sports scores or weather on the mobile Web and instantly connect with people via Walkie-Talkie, which is why we offer all these unlimited services in our popular all-you-can-eat plan,” Carter said. “Others may try to compete, but we are confident that our offering is still the best value in the prepaid marketplace and provides consumers with a comprehensive suite of services that they are looking for from their wireless provider at an affordable price.”
This sort of competitive squabbling probably only will increase in the days ahead.
The customers that Virgin Mobile, Boost Mobile, MetroPCS and others are seeking have become an increasingly hot prospect.
"The tier-two market is clearly the most exciting segment of wireless today, according to Whitey Bluestein, founder of strategic advisory firm Bluestein & Associates," wrote Sarah Reedy at TelephonyOnline.com. "These carriers are expanding and experimenting more than their larger peers, and it's showing in their results. The value providers are slicing and dicing plans, features and services to find new subscribers anywhere they can, he said.
"All the excitement, growth and innovation on plans is all coming from the so-called prepaid or hybrid market," Bluestein said. 'You can pay twice as much to sign a long-term contract and have a better choice of handsets and a little better roaming possibilities, but I think for a lot of people who are looking at expenses, especially in this economy, [prepaid] will be an increasingly compelling proposition. There will be a lot of continued growth in this space in the market, and I think it will increasingly put pressure on the big guys to play in this space.'"
For now, Sprint's Hesse probably will sit back and see what happens. Success that Virgin or Boost enjoys will be helpful to Sprint.
If the back-and-forth begins to become unproductive, however, maybe we can expect Hesse to pull the telecom CEO's version of a father's attempts to restore order.
Can you imagine him calling the top executives at Virgin and Boost and shouting something like: "Don't make me pull this car over!"