Boost Mobile's Matt Carter says the $50 rate plan isn't causing a price war

On the Hot Seat with Boost Mobile President Matt Carter

When Boost Mobile recently launched a $50 per month unlimited wireless plan, some critics said the prepaid iDEN operator was starting a price war among wireless carriers. Boost, which is the prepaid arm of Sprint Nextel, typically catered to the urban youth market; however the Sprint division is changing that focus with this new unlimited plan. Boost Mobile President Matt Carter talked with FierceWireless editor in chief Sue Marek about the new $50 unlimited price plan and how his company is broadening their reach by going after customers that want an affordable and predictable wireless rate plan.

FierceWireless: Why do you think this $50 rate plan is attractive to consumers and who specifically are you trying to reach with it?

Carter: When we looked at the overall prepaid category, the challenges that we have seen to the economy we felt there was an opportunity for growth by offering consumers a much more value oriented plan. With prepaid, the shift has taken place with MetroPCS and Cricket to offer these value plans on an unlimited basis. Their unlimited plans are much more regional so we thought there was an opportunity given where growth was going in prepaid to provide a plan that brings unlimited calling minutes and text messaging. We felt that the target consumer would go beyond the traditional prepaid customer but also bringing in customers that were much more value conscious. This is a broadening of the prepaid market beyond its traditional customer segment that has traditionally been credit-challenged customers. And also we wanted to bring in customers that were looking for affordability and predictability with a wireless phone.

FierceWireless: Originally Boost was really targeted at the urban youth market. Isn't this rate plan taking it much broader than your original intent?  

Carter: When we looked at prepaid, we did a good job of attracting youth and urban customers but the growth in prepaid extended beyond that marketplace. If we wanted to continue to grow and be a relevant player within prepaid we need to shift our demographic focus. We are still getting and want those customers that have historically been attracted to Boost but it's about bringing Boost to others. 

FierceWireless: Are you concerned about capacity issues with this unlimited plan? 

Carter: No we aren't concerned about that. Given our new positioning, the marketing efforts put forth attract customers from all over the country.  If we were targeting the same customers in the same concentrated geographies that we have historically been in you could make the case that there would be concerns about capacity. But our approach, and what we have seen so far, we are capturing customers from across our different markets so that puts less strain on capacity issues. We have no concerns about capacity issues. We will continue to monitor the stress points to our business, call centers, product inventory and network capacity--these are all things we have to do on a day-to-day basis.

FierceWireless: Do you think that you are inciting a price war with this plan?

Carter: No, not at all. There are others out there who will have a lower-advertised price point. We don't feel we are starting a price war but we are starting to make consumers rethink prepaid as a primary option to consider as opposed to a default option. We are not in the price war game.  We don't feel like we will be the lowest price or the highest price but the most affordable price for what you buy.

FierceWireless: We have now seen T-Mobile USA launch a $50 unlimited plan. It appears that you are impacting the Tier 1 carriers now.

Carter: Their plan seems more to me like a churn reduction effort for their existing customers. Their plan stacked against our plan is different. They give you $49.99 for just voice. We give you $50 for unlimited voice, text, walkie-talkie and Web access. This is an attempt for them to maintain what they have.

FierceWireless: Are you doing anything differently with distribution to get more customers on this plan?

Carter: Yes, we have national retail stores with RadioShack, Best Buy, Wal-Mart and Target. Those national retailers give us the opportunity to reach a broader segment of the marketplace and we complement that with our local and in-direct stores. We are in many thousands of locations. Our channel strategy is to be convenient so if consumers want to buy our product they can find it in these various locations. We are not just a MetroPCS or Cricket, because they rely on local indirects. We have a diversified retail strategy. We have local, indirect, national and Sprint retail stores and online.  That gives us a broad reach to this segment.

FierceWireless: Will you launch more devices or handsets to appeal to this broader potential market?

Carter: We just launched the Motorola Stature i9 device (click here for video demo [1]). It's an amazing iDEN device. The form factor is unlike any iDEN device you have seen. It's very thin, compact and doesn't have the usual antenna that you see on these devices. We are broadening our portfolio. We have a Qwerty device coming out later this year and are working on several other handsets. When we launched the $50 unlimited plan we had five SKUs and now we are looking at having 7 to 8 SKUs by year-end.

Historically prepaid was looked upon as the poor man's choice. When you have a compelling plan like the $50 unlimited plan from Boost you will bring in a different segment of the population and they have a different expectation around handsets you should have.  We are increasing the appeal of the handsets.

FierceWireless: But to some extent you are limited. Other prepaid carriers can get handsets from multiple manufacturers. You have to have iDEN and Motorola. Doesn't that limit you?

Carter: I would say that's an opportunity. It allows us to work more collaboratively with Motorola. Other carriers have many manufacturers and that is a vendor/supplier relationship. Motorola is our partner and we are critical to their success and vice versa.  We can customize our handsets to appeal to this broader segment of the population. I don't view it as a limitation.

FierceWireless: Sprint has announced layoffs. Will this impact Boost?

Carter: No, not a bit.  A lot of companies are going through challenging times and trying to make sure they have the right cost structure in place to navigate these tough economic times. We have our heads down and we are trying to deliver profitable growth for the business. We are working to meet the expectations that Dan Hesse and the Sprint Board of Directors have placed on Boost.

We are pretty lean and mean now. The entire Boost organization has roughly 400 people in it.