Boost reinstates phone giveaway after Sprint bleeds prepaid users

Image: Mike Mozart/Flickr

Boost Mobile is once again offering free phones to users who switch from other carriers. The move comes after Sprint’s prepaid customers left in droves during the third quarter.

Boost launched a campaign earlier this year offering customers one of five phones free, or a $50 discount on other devices, for every line switched from a competing tier-one operator. But as Wave7 Research noted in September, Sprint’s prepaid brand pulled in the reins on that promotion beginning Sept. 1, maintaining the discounts for switchers but killing phone giveaways “out the door” at the point of sale.

Wave7 reported this week that Boost reinstated the offer in its retail outlets this week, however, and a Boost spokesperson confirmed the move to FierceWireless, saying the promotion was “enhanced’ in light of the upcoming holiday shopping season.

“Boost on 11/1 ended its brief experiment with dropping the offer of free phones for switchers,” Wave7 reported to subscribers this week. “Boost’s reform of ending instant free phones for porting customers was a journey – sort of like the Hindenburg.”

As Wave7 noted, Sprint lost a whopping 427,000 net prepaid users during the third quarter as competition in the once-placid market continued to heat up. The carrier hopes to regain its momentum in that segment with the relaunch of its Virgin Mobile brand, although the debut for the overhauled service has been pushed back to early next year.

Boost’s move to stop giving phones away at the retail level was clearly an effort to cut expenses, and Sprint may have been hoping Boost’s rivals would follow suit. Instead, though, major prepaid players are stepping up their promotions as the holidays approach: Wave7 reported that MetroPCS “doubled down on the idea” with a holiday offer of two free phones when at least one number is switched from a competitor, and Cricket increased the number of free phones for porting customers from three to five.

The failed experiment underscores a cutthroat prepaid market where service providers often gamble by giving away handsets or offering them far below wholesale costs, then hoping customers stick around long enough to at least cover the cost of the devices.

“It’s very, very, very competitive in prepaid out there; I would even call it crazy competitive,” CEO Marcelo Claure said last month, citing offerings that package handsets sold at a loss with prepaid service. “We’re trying to play less of that game and focus on profitability.”

Just how Sprint plans to do that with a new Virgin Mobile still isn’t clear.