Sprint Nextel's (NYSE:S) Boost Mobile prepaid brand is adding a $5 charge to its $50 unlimited plan for new CDMA Android smartphone customers that will go into effect the day before Boost launches a new Android phone from Samsung.
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Samsung Transform Ultra |
In announcing the Samsung Transform Ultra, which Boost will start selling Oct. 7 for $230, the prepaid carrier said that beginning Oct. 6 it will tack a $5 charge onto its plan for unlimited nationwide talk, texting and data. The plan will still offer the Boost shrinkage feature though, in which for every six on-time payments, the cost of a new customer's Android Monthly Unlimited plan will shrink by $5, eventually getting down to $40 a month, which is $5 higher than the current Monthly Unlimited with shrinkage. Sprint said existing $50 Monthly Unlimited customers with Android devices as of Oct. 6 can keep their current price plan as long as they don't let their account expire.
"As all carriers are learning, the costs to run smartphones on the network are higher," Sprint spokeswoman Jayne Wallace told FierceWireless. "Most BlackBerry plans have had an add-on for the same reason, and we need to continue to invest in network capacity to ensure the best customer experience on the Boost Monthly Unlimited plan with shrinkage." Sprint added $10 to the cost of its $69.99 Everything Data plan for new smartphone customers in January using the same rationale.
The pricing change, while small, comes just as TracFone's flat-rate Straight Talk service starts selling its first Android device, the Samsung Galaxy Precedent, which will use Sprint's network. That service will cost $45 per month. The Transform Ultra has slightly better specifications than the Galaxy Precedent, with a full Qwerty keyboard and version 2.3 of Google's (NASDAQ:GOOG) Android platform (the Precedent runs version 2.2), but the phones are very similar.
In a blog post, BTIG analyst Walter Piecyk wrote that Straight Talk offers "a pretty big discount for what are nearly identical products," but that Boost has several advantages including wider distribution than Straight Talk, which is sold primarily through Walmart.
"Many will point to the higher network utilization of Android phones on a network as the reason for a price hike, which is true but harder to define given the capacity that exists on Sprint's network and its need for scale," Piecyk wrote. "Higher prices can help Sprint's margins, which will be pressured from the network modernization plan it will discuss at its upcoming investors meeting on Oct. 7th."
For more:
- see this release
- see this BTIG blog post (reg. req.)
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