Virgin Mobile revamps prepaid broadband plans

Recognizing that prepaid prices can only go so low, Sprint’s (NYSE:S) recently acquired prepaid arm Virgin Mobile is counting on adding value, not cutting prices, to attract new customers. The carrier today announced upgrades to its prepaid Broadband2Go data plans that will give consumers more data at the same unlimited price points.

Virgin was the first national prepaid carrier to introduce unlimited broadband plans when it launched Broadband2Go last summer.The plans range from $10 to $60, which will stay the same, but now three of the four plans will add more Megabytes per month. For example, the $60 plan now caps off at 5GB, which Virgin said is a suitable level to replace at-home broadband service.

With Broadband2Go, like Virgin’s voice service, consumers can monitor their usage and add Megabytes as needed through top-up or credit cards. There’s no activation fee for the service and new top-up cards for 300MB of data over a 30-day period cost the user $20. Virgin said 30 MB of data translates to 15 hours of Web browsing, so 5GB will enable 250 hours of browsing.

According to Virgin Mobile chief marketing officer Neil Lindsay, more than 70% of Virgin’s customers said they signed up for Broadband2Go because of the flexibility to change the plans as they needed more or less bandwidth and to pay only for what they needed. Virgin is targeting those cord cutters, such as students or families, who may be using the Broadband2go as a replacement for their at-home Internet service. Virgin’s own surveys indicate that this at-home group already includes 16% of its Broadband2Go customers. Of its user base, 30% also use the card more than four times per week, and 47% asked for additional data on their existing plans.

Virgin will market the updated plan with a new ad campaign in print, online and on coffee-cup sleeves in 30 airports across the US. Virgin sells the Novatel Wireless-built device, what it said are the smallest EV-DO Rev. A modems on the market, at Best Buy and Radio Shack, Wal-Mart.com, Target.com and its own site for $99.99.

On its Q4 earnings call, regional CDMA carrier Leap Wireless executives suggested they would also introduce new pricing plans not necessarily built around price cuts, although they did not reveal any details. This is a move that most carriers will have to mimic considering that prices are already considerably low. And, with wireless subscriptions well near saturation, existing customers are becoming the most valuable at the same time that data is becoming the new battleground for wireless in both post- and prepaid. Rich Alexander, director of mobile broadband at Virgin Mobile, said it is too early to rule out lower pricing for prepaid providers, but that it wasn’t what its consumers were demanding. They wanted more time, more bandwidth and more data.

“I think data services have been and will continue to be an important area for prepaid,” Alexander said in an email interview. “If you look at the evolution of voice services extending to include messaging, data services and mobile entertainment applications, clearly prepaid will continue to extend out to leverage available technological capabilities. As Sprint is extending its 4G leadership by launching the next-generation service across the country, we are in a position to compete effectively in the prepaid segment.”

Prepaid may be going strong, but Virgin Mobile has also been busy this week notifying its current postpaid subscribers that their service will be turned off by May 25. Sprint is ceasing to offer the soon-to-be solely prepaid provider’s independent postpaid brand, formerly Helio, at that time. At the same time, Sprint is looking to add the 86,000 affected Virgin postpaid subscribers to its own brand by incentivizing those subscribers to switch to Sprint. It is offering a $50 credit towards one of its postpaid handsets that comes equipped with a two-year contract. This is in addition to the $150 off of handsets Sprint is currently offering for new customers.

On its fourth-quarter earnings call, Sprint’s head of prepaid Dan Schulman discussed how the carrier would revise its prepaid offerings to target different consumer segments with different value propositions and its three brands, Boost Mobile, Virgin Mobile and Assurance Wireless. A Virgin spokeswoman reiterated that only Virgin Mobile postpaid is going away, not prepaid. Prepaid is alive and well she said, and along with Boost Mobile, will continue to serve as the cornerstone of Sprint’s prepaid strategy.