Boost Mobile blurs line between pre-, postpaid markets
Boost’s launch of a $50 unlimited pricing plan with no hidden charges will pressure more than just prepaid carriers
“[Leap and Metro] have been successful – kudos to them in that they’ve publically had an impact in changing the game and have published numbers indicating they are successfully attracting customers,” Lindsay said. “But we are not prepared to give that opportunity up. It’s also about customers, especially in this economy, looking for predictability and a fair deal. They want to get as much as they can for as little as they can.”
Boost has always marketed toward young, hip wireless users, but it will launch a new ad campaign focusing on the $50 flat-rate service for any customer looking to save. Lindsay said Boost will keep its “cool and interesting” angle but aim to play up the value and network quality more. The cheapest prices don’t always breed loyalty, he said, but low price plus a brand consumers can be proud of will succeed amongst both existing pre- and postpaid users.
Craig Moffett, senior analyst at Bernstein Research, classified Boost’s move as the next salvo in a slow-motion price war. Verizon Wireless kicked off the first flat-rate pricing war back in March, when it began offering a $99 all-you-can-talk plan, to be followed promptly by AT&T, T-Mobile, Sprint and Alltel. Still, this price point hasn’t attracted a lot of consumers. Investors have been speculating for months that Sprint will resort to price cuts to compete, and if Sprint’s move jumpstarts a trend, as it has in the past, it could be a slippery slope, Moffett said.
“Without the obfuscation of on-net and off-net pricing, time-of-day bands and complex usage thresholds, price plans are infinitely more comparable than they have been in the past,” he said in a research report today. “And where there is perfect comparability, there is only one direction for prices to move.”
Still, according to Lindsay, Boost’s goal is to operate in that middle space between the cheapest deal that involves add-ons, like Metro and Cricket, and the contracts that include all the features and data. He’ll proudly acknowledge that Boost lacks the bells and whistles; it’s solely for the connection. Because of this narrow focus, he doesn’t anticipate nor want a price war.
“It will present some price challenges to certain offers that are very connection-centric and value-conscious, like some of the T-Mobile contracts,” Lindsay said. “I don’t think it will target a price war with Leap and Metro because their business model is so different. They are structured to have add-ons and fees. That is how they get their ARPU. I hope it doesn’t trigger a price war, that isn’t the intent. We really just want to give a great deal on this network that is operating on its best performance network ever - a postpaid quality network on prepaid prices.”
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