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On the Hot Seat with Virgin Mobile USA CEO Dan Schulman

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Ever since Virgin Mobile USA went public last fall, the MVNO has been under fire from financial analysts. The company was chastised when it reported a net loss of $14.7 million during the fourth quarter last year and reported fewer net new customer adds than expected. Virgin Mobile USA CEO Dan Schulman blamed "economic conditions" for the loss and warned that the conditions will continue to affect the consumer market and wireless industry during 2008. FierceWireless editor Brian Dolan talked with Schulman at last month's CTIA Wireless 2008 conference in Las Vegas about Virgin's troubles.

FierceWireless: How is the slowing economic environment affecting Virgin Mobile USA?

Schulman: There is a real fear that a slowing economic environment will lead wireless users to cut back on usage. It doesn't have to be though. The real issue and key to [Virgin Mobile USA's] value proposition is that it's tailor made for this kind of environment. Just because we're in a difficult economic environment doesn't mean we should cut back on our offerings. So our new service plans show that we're not sitting still, that we are still innovating. If you're like 75 percent of the U.S. population, you're using 200 minutes to 1000 minutes per month. So we're sticking to our roots--flexibility--and offering great values without having to sign long-term contracts--like our 5 cents-a-minute plans. For $50 a month, a customer can now get 1000 minutes with rollover. That's new for a prepaid offering.

FierceWireless: How has Virgin Mobile USA changed since going public? Any comments on the economic downturn and Virgin Mobile USA's share price?

Schulman: We try not to operate any differently because we are a public company. We still try very hard to put customers first. But, of course, we also have new constituencies like public shareholders and we think hard about that constituency. We believe that the best way that we can best serve them is by hyper-serving our customers. Look, we're not happy with the share price. We went public in October [2007] and that's pretty much when the economy started showing strains-in the fourth quarter. Those strains manifested themselves in the first quarter [of 2008]. It has been a difficult time to go public. The ability to provide good long-term forecasts suffers in a changing environment. We tried very hard in our last call to give conservative guidance and acted under the assumption that the difficult economic times will last through the entire year. At the same time we are confident and determined that if we stay true to providing customers with flexibility, then we will come out of 2008 strongly positioned to enter 2009.

I would point out, though, that Virgin Mobile has made a lot of progress over the past three years. [Virgin Mobile USA] is just shy of being a Fortune 1000 company. This was the first year of profitability and the first year we were free cash flow positive. Sure, growth is not what we had hoped it would be, but if that's because we continue to offer flexibility to consumers then we believe that philosophy will help us come out of this on top.

FierceWireless: Regulatory issues in the wireless industry have been top stories as of late.  Does Virgin Mobile get involved with issues (like the open access provision for the 700 MHz auction) or does is hang back because it's an MVNO?

Schulman: We do get involved in regulatory issues more than you might imagine. We are one of the leading advocates for privacy. We make sure that every transaction is required to have a PIN number, that way it's hard to steal other people's identity. We also pushed quite hard to make sure [Universal Service Fund] rules are not discriminatory against low income customers. So we do believe in basically championing what customers want and we can focus on that since we don't have an embedded network to defend. That does provide a tremendous amount of freedom by not having to have one to protect so we can exist to provide what customers want. Maybe we can do that in an innovative way and with a focus that no one else has because we have no network. But being at the forefront of these issues is very important to us. We aren't against VoIP-types of solutions since we don't have a postpaid minute base to protect.  

There has been a lot of talk about open networks and handsets being unlocked in the past year. We believe that at the high end of the market--where somebody is willing to spend $200 to $300 for a handset-those users ought to have the flexibility to move from one carrier to another. However, on the prepaid side of the market, low and middle income households can't afford these higher prices so subsidies [on handsets] are critical to allow penetration into these households. Also, if you force everyone to unlock all phones, and you can no longer subsidize them at the low end, then you are going to take out a chunk of the market that has yet to be penetrated. It's a much, much more nuanced situation than many publications are making it out to be.

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Comments

Their EBITDA in 2007 was $99 million, not $235 million, no wonder why their stock is $2 a share now...

Fine.

There have been some nasty rumors going around that I am the Virgin Mobile USA CEO. Let me say for the record I am not the CEO of Virgin Mobile. Thank you.

Virgin Mobile is famous for hanging up on customers whenever there is any sort of dispute. They will not stay in business long, with Schulman directing this sort of fraudulent activity. Virgin Mobile should take a lesson and learn from Enron.

I agree 100% with the comment above. Last week I called Virgin to see if I could pay my monthly bill using the cash balance (had been sitting there for a year) and the remainder with my registered credit card. I was told, sure. One minute late the live advisor hung up. I called back and was told I no longer had the $44.99 I had had for 2 years because I had just canceled it. That of course was not so. I spoke with one after another Advisor and then a supervisor. The upshot of 5 hours of "conversation" and countless emails was, "OOOPs we made a mistake and canceled your account." We can't give you the $44.99 account back because we longer offer it.!! I had never canceled it; they did. They maintain they can't restore it. I was told, "Please take the new plan $49.99 a month...$60.00 more a year and you will like it. "As a bonus for your trouble we will put $7.23 into your cash balance. Where the heck did they get that figure? If this isn't fraudulent behavior nothing is. Are operations for this company based in India? I have never had a phone "conversation" with anyone from that company that i didn't have to say, "What", "please Repeat that." I have never dealt with more unknowledgeable billing people. It appears they read from a script. They never answer a question directly; they keep reading the same thing over and over. Does anyone here know the email or mailing address of CEO Dan Schulman. I'd love to contact him.

THE ADDRESS I HAVE IS VIRGIN MOBIL USA 10 INDEPENDANCE BLVD WARREN N.J. 07059. YES I AM WRITING A LETTER TO.IT TOOK 5 DAYS TO GET MY SONS PHONE WORKING. I BOUGHT IT FOR HIS BIRTHDAY AT RADIOSHACK AND THE GUYS AT THE SHACK COULD NOT GET VIRGIN MOBIL TO CHANGE NUMBERS, PHONES OR ANYTHING ELSE.THE GUYS AT THE SHACK WERE GREAT IN TRYING TO HELP ME. I DIDNT GET THE PHONE ON TILL I CALLED CUSTOMER SERVICE AND THEY STAYED WITH ME TILL WE SOLVED THE PROBLEM. THIS TOOK WELL OVER AN HOUR WITH THEM AND THE TECHS. TOTAL WE LOST 5 DAYS AND HAD ALOT OF DISAPPOINTMENT.

I have been a Virgin Mobile USA customer for two-and-a-half years and have been very satisfied with their service and quality. The few times I had questions or needed to make changes, their representatives were always nice and helpful and resolved my issues. I know not everyone has such a positive view of the company or their service, but I think it is important to counter all the complaints when I can honestly say I'm happy with the company and the product they provide.

I know for a fact that a lawsuit is being filed and a petition is being done online to have virgin mobile shut down because of their outrageous policies and horrible phones and customer service! A young woman by the name of Joy Colclough is spearheading the lawsuit!

I WOULD LIKE ALSO THE EMAIL ADDRESSOF MR.SCHULMAN. I SENT AN EMAIL TO THE REGULAR NO CUSTOMER SERVICE DEPT. AND HAVE NOT GOTTEN A REPLY. THEY CHARGED MY CRDIT CARD WITH THREE MO. OF CHARGES INSTEAD OF ONE MO. ONE OF THERE EMPYOYEES DID THAT, SO BY THE TIME I FOUND ALL THIS OUT AND NOTIFIED MY CARD CO. IT WAS NOT MY FAULT OR MY DAUGHTERS, THEY COULD HAVE SENT HER A NOTICE, ESP. AFTER THEY KNEW THEY HAD WRONGLY CHARGED ME, AND DID NOT. BUT NOW THEY WILL NOT CLEAR HER RECORD SO SHE CAN CONTINUE SERVICE OR GET ANOTHER SERVICE. I ALSO HAVE SPENT LOTS OF TIME AND HAVE GOTTEN NO WHERE. I JUST ASK THEM TO BE FAIR. THANKS, CAROL

Absolutely the worst experience I have ever had with a phone company trying to get service from one company to another. ATT has released my phone and deactivated it 5+ hours ago. Finally I was told that VirginMobileUSA had the phone number and it was "slowly rolling over" into the system. I have only one phone. No disclosure up front as to specifics and ramifications.

We'll see how the service goes... when I get it.

Did you ever get an email address for Dan Schulman?

This is the worst customer service on earth! I had to contact them no less than 6 times at about 45 minutes per call. They have false advertising online and their live operators (In Manila) are inept, taught not to listen, incapable of fixing anything and give poor advice that if taken, will really mess you up for months. I am writing to Dan Schulman, CEO at:10 Dependence Blvd. Warren, NJ 07059 and I encourage all others with customer service problems to do the same. THe phones and plans are good but if you ever need customer service it is non-existent. Beware.

My two brothers just had their credit cards charged for one months service, even though the phone still has minutes remaining for the month. Calls to the Phillipines are met with resistance and a lack of caring by the customer service department. They use a scripted response. The charges are being disputed with the bank, but Virgin should not be charging two credit cards for one months fee. But, after reading these comments, Virgin probably doesnt give a rats fanny. Maybe they will with my letters to the State Attorney General, the State Banking Commission where I will be asking for credit card theft as charges, and a complaint to the FTC and FCC.

Where do I start. First the company failed to notify me that the monthly charged for unlimited anytime minutes had changed from 109.00 per month to 49.95 per month and over-charged me for six months. When I discovered this I notified them to ask for a credit or refund of my monies and was met with a constant scenario's of no's....If you call and ask for a supervisor to resolve an issue that you're having with their services, representatives or products. It's an upheal ... i used that word instead of uphill, because after you spoken with you have to heal yourself or want to self medicate. A Battle to get someone that speaks ENGLISH. ENGLISH. PLEASE!!! I had a phone that was not holding a charge and called in to utilize my warranty on the phone that I have and was told after the first, second, third call that the phone was ordered.. needless to say the fourth call made to them I was told that the phone was never ordered,but was not even in stock. Two weeks later they send a new phone with no way plug to charge the phone with the order and was under another person's name altogether. I'm sure that person is wondering where there phone is. The last straw with this inconsiderate..money hungry..disrespectful none english speaking, never can resolve, and issue company came recently. I topped up my phone for my normal monthly bill and was unware that there was a shortage of 3.18 for the fee that's charged to top up on your phone. Virgin took it upon themselves without informing me once again of a change to my service that instead of contacting me to let me know that the fee was not paid. Virgin, charged me by the minute the only way I found this out is when my phone went dead while I was talking to the emergency room concerning a family member. I called them and to no avail as usual nothing could be done to just let me pay the addt'l 3.18 for my monthly charge. Unfortunately ..I have to top off a whole another month ..strong armed basically ...in order to get back in touch with the emergency room that was caring for my loved one. This company is the worst. If you're not a believer..you will be ...just wait until a situation arises then all you'll here is I'm sorry but there is nothing that I can do.. I'm sorry we don't credit, nor issue refunds even when it is VIRGINS' fault. The CEO should take a class in customer service then pass it down to the rest of those idiots that represent the organization. The only two questions I have is where is the lady joy colclough contact info..And CRICKET Phone service where are you when I need you. Can you come to IOWA? No wonder you claim that the company is loosing money but the service and the lack of ethics so now you result to ripping people off in order to survive.

Sincerely

fed up

THE ECONOMY?
LOL
The Economy is going back because VIrgin Mobil outsources its work to the Phillipines...

Plus there service SUCKS

I have admired Sir Branson since the mid eighties at the Virgin Records success. His continued ventures and the cell phone plan made me a "Techie" as my two offspring referred to me. I loved the pre paid plan and have lost three phones since, but the low cost of the cell and the $20 top up helped me stay with them.

Now the company is absolutely horrible. I am told I can set up the 5cents a minute unless I think its done and I check to learn I am being charged more. I also hate that stupid "Alex" thing that is impossible for me to deal with cause it doesn't understand half of what I say and I have to repeat to a darn tape or whatever.

I, now am further upset because I am calling the Phillipines for service I expect to be here in the US. I am unemployed and resent jobs being sent overseas so the companies are not contributing to our Social Security funds. The real truth about the problems with Social Security is the companies that ended jobs here in the US to create them overseas is not only for lower wages, but to end their being responsible for about three times a employee's amount contributed to his/her Social Security account. The largest deficit any employer has is payroll, but Social Security is a thorn in the sides of employers, they feel like they don't get any rewards for the contributions and prefer to send the money to the caymans or whereever to keep the IRS away from it.

We need to organize to end the sending jobs away but for sure to make employers pay a penalty to Social Security for every job they send off our borders. The penalty is to be high enough to let our future retirees not be so fearful of not having it there at the time they are old enough to draw it.

Respond if you are supportive and maybe we can start a movement to help Social Security do as well as FDR set in place.

Do you know they steal from their customers I paid for servie until January 10, 2012 and have plenty of dollars left onmy prepaid account.However,because either their staff or the staff member at Radio Shack did not update the nect payment date on the front of the phone, my phone is turned off. I called them yesterday and they told me my phone was to be active until January, 2010 and they disconnected it and when I tell told them about it today they said they couldnot verifiy my phone was off because they had no access to a landline and could not call the cll phone to veryfiy it was off since their records said it was on- I guess I called nothing!!!!

My name is Jennifer, a Virginmobile customer for over a year now. I have always been happy with my service I have received and love my plan and coverage. Recently I have been having some billing issues though. Over the past several months I have on numerous times been double deducted in a month for services. I then put a note in my account where I would have to call into the center to process transactions so this wouldn't happen anymore. It has happened twice since then. I then called customer service and do to the several issues I was told to be refunded the money paid for my services and due to the inconvence I would receive one month of free service. I was refunded both amounts then deducted yet again. I call in and spoke to a supervisor whom then offered to give me back a portion of the money the next month. I stated they had taken the money from me this month and being a holiday taking this payment in and out of my bank account several times in one month is causing my account to overdraft. I don't even know how they took it out again if I didn't authorize it since it clearly states that on my account. The supervisor apologies and told me she could listen to the call but she thinks I was given some bad information. We came to an agreement and money was to be credited to my VM account for the month of January. After a few days I checked and the money had not been added to my account so I again called into the service center. This time when speaking with an associate I was told that it was incorrect and that this money would be returned to my bank account with in 3 to 5 days. A week and a half goes by and still nothing in my account and then I call into the service center again and the gentleman stated yes he could see they charged my card three times in one day , opened a new ticket item and to call back the next day for a resolution that the previous rep opened a work ticket and it did not refund the money. Though she told me it would be returned to my bank account and mentioned nothing about the open ticket, not setting the correct expectations. Today I followed up on the call and spoke with a gentleman whom stated that I was not going to be refunded the money and that there were no notes in the account that stated that information. I asked each person whom I spoke with who all stated they noted my account some have even read this information to me. I asked the supervisor to then pull the calls from this month to review them if it was not noted because this is what was promised to me. He stated he couldn't do that , I said the previous supervisor said she could though it was not nessacary. Why when I call do I have such a hard time, I just don't understand why its been such an incovence just to pay my phone bill in which I always have on time for the last year and half. I am very upset and would like this issue taken care of at this point I have no where else to turn. I work for the largest HR outsourcing/ customer service center in the world. I know if I were to have had this lack of empathy, knowledge or gave bogus information it would have been escalated and back to me with in an hour. This is just not best practice for business.
My VM phone number is 224-565-4511

Jennifer Hart

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