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Virgin Mobile jumps into pricing war with new $50 unlimited plan
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Virgin Mobile USA cut the price for its unlimited calling plan to $50 from $80, putting it into direct competition with second-tier operators including MetroPCS and Boost Mobile. The MVNO's $50 calling plan will be available April 15, and customers who currently are on the $80 plan will have to call Virgin Mobile to switch over.
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."
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.
In other Virgin Mobile news, the MVNO unveiled a plan to help customers who have recently been laid off, called Pink Slip. If customers sign up for the new unlimited plan or other monthly plans without contracts, and are on the plan for two months and then become eligible for unemployment benefits, Virgin Mobile will waive up to three months of monthly charges.
Finally, Virgin Mobile announced a renewed deal with Sprint (Virgin Mobile's service runs on Sprint's CDMA network through an MVNO deal between the two companies). According to a Securities and Exchange Commission filing, Virgin Mobile "will pay fixed, lower rates for domestic network usage for each minute of use each month exceeding a base amount, effective April 1, 2009. Beginning January 1, 2010, VMU (Virgin Mobile) will pay a fixed rate for messages, regardless of volume, but will no longer be eligible to receive a discount for messaging rates in 2010 based on aggregate payments for all usage during 2009. The company will be eligible to receive a discount to existing rates for data services relative to aggregate payments for all usage during 2009."
For more:
- see this release
- see this article
- see this article (sub. req.)
Related Articles:
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Virgin Mobile's Dan Schulman talks about data growth and hybrid plans
T-Mobile's $50 unlimited voice plan goes nationwide
Sprint launches new plan with perks for loyal customers
Boost Mobile chief: Unlimited plan picking off T-Mobile customers
Boost Mobile plan sparks fears of price war
Boost Mobile debuts $50 unlimited voice/data plan
Comments
Posted by Zanger | April 9, 2009 - 1:26pm
I need to question how sound it is for Sprint to use surrogates to their bidding? First Boost and now Virgin? How will shares recover for Sprint if they are allowing traffic to flow unchecked on the CDMA network? Guess all the lost subscribers... the ship is sinking and they do not care at this point???
Posted by Anonymous | April 9, 2009 - 1:55pm
What is Sprint thinking? Either they have plenty of network capacity, or they're masochists and enjoy less profit for utilizing more capacity which means more capex spent on network equipment, which means raising more equity and issuing more shares thereby diluting shareholders, or raising more debt under which they’re already sinking - cause free cash-flow from fleeing subscribers can’t cover it all. But on the other hand in today’s economy, selling service at every day low prices to every day people ain’t a bad thing if you’re looking for TARP handouts and you’re too big to fail and thousands of people could be thrown out of work and you don’t what to do about Nextel and WiMax, and you’ve just been ethically hoodwinked by a CEO who could fore see how to take a big pay-out, but who could not fore see the how he would destroy the share price (or didn't care) and is now teaching university students the fine art of taking the money and run. When will S ever focus on just trying to get one thing right?
Posted by Raul | April 9, 2009 - 9:40pm
What Sprint Needs now to recover Share value is stop the bleeding, at any price. With these plans, the palm Pre, and cleaning their CS they are on the road. What are we missing, some nice handset from VMU, or The Palm Pre now, so it can generate buzz before the iphone launches.
Posted by Anonymous | May 13, 2009 - 11:36am
I still think that $50 per month is a lot of money to pay for a cell phone even if you can talk until you're blue in the face. Why anyone would want to talk that much is beyond me, I make all the calls I need and a few just to keep in touch and don't spend half that much with my Net10 phone. I suppose it's because Net10 is so cheap - they only charge 10 cents per minute and that includes roaming and long distance. There is no daily fee or hidden charge so it really is half the price.
Posted by Singer | July 28, 2009 - 10:56pm
The prepaid market is starting to attract a lot of attention and this is just another example. However sprint is also going to pick up virgin's problems as well. There trying extend to other customers and markets but i think they need to satisfy the ones they have as well. I read that virgin plans to have a plan for low-income people. It will offer 120 minutes for only 10 dollars. It sounds great but the problem is they are not going to offer to everyone. Everyone wants to save money in these times and it is unfair to offer a plan to only a certain group of people
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