Less than a year after switching on its LTE network, Sprint Nextel (NYSE:S) announced it will offer LTE services through its prepaid brands: Virgin Mobile USA and Boost Mobile. The action dramatically lowers the cost of Sprint's LTE service and could put pressure on Sprint's larger rivals AT&T Mobility (NYSE:T) and Verizon Wireless (NYSE:VZ), neither of which offers prepaid LTE service.
Virgin Mobile will sell the Samsung Galaxy Victory 4G LTE Android smartphone for $299.99. Virgin's No-Contract Beyond Talk unlimited data and messaging plans start at $35 per month. Boost will sell the LTE-capable HTC One SV Android smartphone for $299.99 and the LTE-capable Boost Force Android smartphone for $199.99. The phones can be paired with Boost's no-contract $55 Android "Monthly Unlimited with Shrinking Payments" plan, which reduces the monthly price of the plan by $5 every six months (with on-time payments) to as low as $40 a month.
Interestingly, both Virgin and Boost said they will throttle users' speeds if they consume more than 2.5 GB of data per month. According to Virgin: "All plans include 2.5GB/month of 3G/4G high speed data or 3.5GB/month with purchase of mobile hotspot capable device and plan. Adaptive protocol video limited to 600 Kbps. Speeds (including video) reduced to 256 Kbps for remainder of plan cycle, with speeds restored at beginning of next plan cycle. Additional terms apply."
Both Virgin and Boost instituted speed-throttling technology last year on their 3G services, likely in response to users' increasing demands for data.
That Sprint is adding LTE to its prepaid strategy is not a total surprise. Both Boost and Virgin started offering smartphones last year running on Clearwire's (NASDAQ:CLWR) mobile WiMAX network, and they both currently sell the WiMAX-capable Samsung Galaxy S II and HTC Evo Design. Before launching LTE, Sprint resold Clearwire's WiMAX service.
Sprint is by no means the first carrier to offer prepaid LTE services. No-contract carrier MetroPCS (NYSE:PCS) was the first carrier in the United States to launch LTE, in 2010, and continues to offer LTE service with prepaid pricing options. However, Sprint is the first Tier 1 carrier to combine LTE network speeds with no-contract pricing plans.
Sprint, which first launched LTE in mid-July 2012, now offers LTE in 58 cities. The carrier said it now expects to cover 200 million POPs with LTE by the end of 2013.
Sprint's prepaid brands--which stretch from Virgin to Boost to Assurance Wireless to Sprint's new "Sprint As You Go" brand--continue to drive significant business for the carrier. In the fourth quarter, Sprint reported net prepaid subscriber additions of 525,000, down from 899,000 in the year-ago period but up from 459,000 in the third quarter.
- see this Boost release
- see this Virgin release
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