Sprint Gives Boost to Pre-Paid: Unintended Consequences?

As it has done in the post-paid market with its "Simply Everything" package, Sprint Nextel Corp. now is attempting to create new value-price positions for itself now in the pre-paid market. The operator has said it will offer a $50 unlimited plan for its Boost Mobile service on the iDEN network. 

Keep in mind that the new plan will include a data plan bundle with unlimited data, talk, messaging, and push-to-talk service for only $50 per month. The iDEN network won't support 3G or 4G speeds, but many users will be intrigued by the value and price point. 

AT&T  and Verizon Wireless are  currently offering $100 unlimited plans, by way of comparison. 

The $50 plan might help Sprint bring some users back to the Nextel iDEN network. It also puts Sprint firmly in the ring 

with Leap Wireless International and MetroPCS  in the low-cost wireless game. But one never can discount the potential impact in other areas. 

True, it is a "Boost" product, not a "Nextel" product, so the potential impact on the broader Nextel brand might be muted. Keep in mind the drawbacks. 

Phones for the service will be from Motorola and will start at $20. Since Motorola has not kept pace in the handset space, this is a weakness. And there will not be phones from other suppliers, given the historic unwillingness the other suppliers have to supply essentially one North American customer. 

There will some speed issues for data usage as well. 

On the other hand, in a recessionary climate, some observers argue that mobility users will not stop using mobile service, but will look for better deals, so long as handset replacment costs are not steep. This is an advantage for the new Boost package, as rival plans from Metro PCS and Leap Wireless do not bundle in the unlimited data usage, push-to-talk and messaging, and generally run about $60 a month. 

Also, Leap ("Cricket") and Metro PCS are fixed-line replacement solutions more than national roaming solutions. 

So while the new offer does compete with Leap and Metro PCS, Boost will not have any regional restrictions, putting the service in more direct competition with Verizon, AT&T and T-Mobile. 

It's an interesting move. The iDen network and service has some obvious limitations at the moment. But Sprint Nextel is doing what it can, with the assets it has, to create new positions in the market using those assets. Simplicity and value are the new factors in the equation, driven by the feature bundling and new industry price point.

It is the sort of thing one might expect from Dan Hesse, Sprint Nextel CEO. He widely is credited with pioneering the "Digital One Rate" plan that changed industry pricing for use of mobile minutes. "Simply Everything" and now the new Boost plan are in the same line of thinking: change the way usage is packaged and priced. 

Some will argue it is not enough. Of course not. But Sprint has to stop its bleeding before it can do other things that change the value proposition even more.