The battle for the $50 per month customer

In case you haven't noticed, there is a battle brewing for the value-centric wireless consumer. MetroPCS and Leap Wireless' Cricket service have always had a hold on this market with their unlimited price plans that range from $30 to $50 per month.  And Virgin Mobile USA has long appealed to this crowd with its inexpensive prepaid and hybrid plans. 

But now more players are entering the fold. Earlier this year Boost Mobile introduced a $50 unlimited plan that offers unlimited voice, text and web surfing and appeals to value-conscious consumers, many of whom are forgoing their landline phone in favor of wireless during these tough economic times. When I talked with Matt Carter, president of Boost Mobile, he said that the company is targeting prepaid consumers and those that want a predictable and affordable wireless bill. In other words, Boost is targeting the same customer base that has always been drawn to MetroPCS, Cricket and Virgin Mobile.

Early indications show that Boost's plan is working. Walter Piecyk with Pali Research said in a research note that Boost's unlimited plan is attracting high demand and could increase prepaid gross adds for Sprint in the first quarter. However, Piecyk tempered that enthusiasm by saying that the firm doesn't have "a strong sense on how many of these new Boost customers are existing Sprint customers but it appears that a large portion is from new customers."

Boost's $50 unlimited plan also has caught the attention of its competitors. Earlier this week MetroPCS introduced a $50 per month price plan that gives customers unlimited talk, text, web browsing, MMS and BlackBerry email access. The carrier also debuted its first BlackBerry phone, the Curve 8330. Likewise, T-Mobile USA, which is known for being the most price-competitive of the Tier 1 carriers, earlier this month debuted a $50 per month unlimited voice plan for its existing customers (those that have been with the carrier for 22 months or more).

But will the proliferation of the $50 per month unlimited rate plan trigger carriers such as Verizon Wireless and AT&T to follow suit?  Bill Ho, research director at Current Analysis, believes the chances are slim that those operators will follow this model. "The other carriers have no interest in meeting this challenge," Ho says. "AT&T and Verizon have a strong, high-margin postpaid business. They would have to see a huge erosion of their base to want to do this."

The $50 per month unlimited plan may not instigate a price war across all segments of the U.S. wireless market, but Boost's move into this space certainly is shaking up the flat-rate carrier space that was once dominated by MetroPCS and Leap. -Sue

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