Leap overhauls rate plans, adds Muve Music to all Android plans

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Cricket provider Leap Wireless (NASDAQ:LEAP) introduced new pricing plans and added its Muve Music service to all of its Android smartphone plans. The flat-rate carrier said it expects the new plans to help it reduce churn and increase gross subscriber additions.

The new plans, which will go into effect Sept. 2, will start at $35 per month for feature phone customers and range up to $70 per month at the high end for smartphones. Cricket is cutting the price of its entry-level smartphone plan from $55 to $50, and the new plan will include unlimited voice, texting and 1 GB of full-speed 3G data per month (previously, the $55 plan included 2.5 GB of data before throttling).

Cricket's new $60 smartphone plan--$5 cheaper than Cricket's previous high-end plan--contains all of that plus 2.5 GB of full-speed data per month, and the carrier's new $70 smartphone plan offers 5 GB of full-speed data per month. Both the $60 and $70 plans offer smartphone tethering. All of the Android smartphone plans will include Muve, which offers unlimited music downloads; previously Muve Music was a $10 add-on, and it wasn't available in all of Leap's Android plans.

Since its introduction in January 2011, Muve has signed up 600,000 customers. "Cricket's customer is young, is ethnic, and tends to be middle and lower income," Jeff Toig, the senior vice president of Muve Music, told the New York Times. "This is not a segment of the market that the major technology companies innovate for." Toig told GigaOM that Cricket expects Muve to have "millions" of customers within the next 12 months, and that to get there the company will launch up to nine more Android phones by the end of 2012.

Interestingly, Cricket customers on Leap's new plans can use new tools on their smartphones to track their data usage throughout the month, and they can buy additional quantities of full-speed data if they need it. Under the new plans, customers can purchase an additional 1 GB of full-speed data for $10 (excluding Cricket PAYGo plans) or they can purchase an additional 50 MB of full-speed data for $1. In the absence of such upgrades, users who travel over their data allotment will have their data speeds slowed for the remainder of their billing cycle.

In a statement, Leap CEO Dough Hutcheson said the new plans will diversify its offerings, strengthen its competitiveness and improve the company's financial performance. "The new plans provide more value and increased functionality for customers at price points that fit their needs and budget," he said. "Cricket will be the first carrier to truly integrate music into its core wireless offering, so that when customers buy an Android device with Cricket--on any priced Android smartphone rate plan they will get music with no added fees or contract. In addition, we are the first to allow customers to instantly buy additional full-speed data if they need more than what is available as part of their monthly plan."

The rate plan changes come at a difficult time for Cricket. Leap reported a net loss of 289,000 customers in the second quarter and a net loss of $41.6 million, which was more than analysts expected. The company also plans to narrow its national retail expansion to just 8,000 stores--fewer than its previous expectations. Leap also said it will not make its $75 million minimum wholesale purchase commitment of network access from Sprint Nextel (NYSE:S).

The rate plan changes come amid widespread speculation that RadioShack will launch a new MVNO next month using Cricket's network. The RadioShack plans seem to fit with the new $50 and $60 smartphone plans Cricket will offer, according to documents leaked to the blog Engadget.

For more:
- see this release
- see this separate release
- see this third release
- see this NYT article
- see this GigaOM article

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