Sprint's Boost cuts prices, introduces $40 prepaid plan in challenge to T-Mobile

Sprint (NYSE: S) prepaid brand Boost Mobile cut its pricing and introduced three new plans, including an entry-level $40 option that challenges T-Mobile US (NYSE:TMUS) and its MetroPCS brand. The moves indicate increased competition in the prepaid space.

Boost's new "Monthly Unlimited Select" plans include a $40 option with 500 MB of high-speed data before speeds are throttled down to 2G; a $50 plan with 2.5 GB of data before throttling and a $60 plan with 5 GB of data before throttling. All of the plans come with unlimited voice and texting.

The plans also support Sprint's Boost Wallet, which provides checking for a $4 fee and allows for free domestic and international money transfers. Customers can also take a picture of their paychecks and have the money deposited into an account tied to a Visa debit card.

The plans replace Boost's previous offer of a $50 feature phone plan and $55 smartphone plan. The plans also do away with one of Boost's signature offerings, its "bill shrink" plan that cut up to $15 off customers' bills over time for making on-time payments. Boost first introduced the "shrinkage" offering in March 2012.

"We felt it was time," Dow Draper, president of Sprint's prepaid business, said in an interview with CNET. "We're tailoring the plans to fit with what people needed."

Existing Boost customers with "shrinkage" plans will be grandfathered, Sprint spokesman Jack Pflanz said, allowing them to continue earning "tokens" for on-time payments. They can also switch to the new $40 per month plan; $40 was the lowest price point customers could have their monthly bills lowered to under the shrinkage plans anyway.

Boost's new plans come shortly after T-Mobile introduced its $40 "Simple Starter" plan, which includes unlimited voice, texting and 500 MB of LTE data. Once a user reaches the 500 MB of high-speed data, the service is suspended, and customers need to buy either a 1-day on-network data pass of 500 MB for $5 or a 7-day on-network data pass of 1 GB for $10. MetroPCS also offers a $40 plan with unlimited voice, texting and 500 MB of LTE data before throttling.

Further, the new plans come ahead of AT&T's (NYSE: T) refresh of the Cricket prepaid brand. AT&T has promised to unveil the "new Cricket" sometime in the second quarter and be "aggressive" in terms of pricing.

In the first quarter Sprint lost 364,000 Sprint platform prepaid customers and 415,000 prepaid customers overall, which the carrier blamed on changes in the Lifeline program recertification process. Sprint sells Lifeline service to low-income customers under its Assurance Wireless brand. Meanwhile, T-Mobile added 465,000 branded prepaid net customer additions in the first quarter, which T-Mobile said was driven by the success of MetroPCS and growth in the 30 expansion markets launched in 2013.

"We are shifting away from a one-size-fits-all approach to a more stratified set of plans," Draper told Bloomberg. "Prepaid has always been very competitive. After the first quarter we decided to broaden our offering."

In March, Sprint launched a new no-contract offering dubbed "Sprint Prepaid" to go after the prepaid market, a brand that is separate from the Boost and Virgin Mobile prepaid brands.

For more:
- see this release
- see this Boost site
- see this Bloomberg article 
- see this Re/code article
- see this CNET article

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