MetroPCS lures Sprint, Verizon subs with ‘bring your phone’

MetroPCS is trying a new tactic to lure customers away from Verizon Wireless and Sprint. It’s offering to re-flash customers’ CDMA phones for use on the MetroPCS network, taking away one of the critical impediments toward switching service providers: purchasing a new phone

While operators have always subsidized the cost of the phone when switching to their networks, they’ve always required contracts, something Metro doesn’t. Tying its no-contract policy with its new bring-your-own device policy allows potential MetroPCS customers to switch over for only the cost of a $30 activation fee. Metro is even offsetting that fee by offering new customers a free month of its unlimited in-network calling and long distance service.

Called MetroFlash, the program is akin to the Subscriber Identity Module (SIM) card activation offered by GSM carriers, which allows customers to bring their own unlocked devices to the network. There are a few more hurdles Metro must overcome for each activation, though. Since CDMA phones don’t use SIM cards, customers have to bring their phones into Metro stores or Metro-authorized dealers to have their numbers and devices reassigned to the MetroPCS CDMA network. Data services and SMS and MMS gateway addresses will also have to be reprogrammed. Any carrier-specific software loaded onto the phone would also need to be erased or deactivated. Applications like Verizon’s V Cast service or the GPS navigation services offered by Sprint and Verizon would be rendered useless.

While the MetroFlash program is sure to attract new customers to the insurgent operator, it may actually hinder its long-term integration plans as it expands into more markets. Metro is building out new networks in the Advanced Wireless Service (AWS) band—two have already launched: Las Vegas and Shreveport, La.—but those frequencies are not supported on any of Sprint or Verizon’s phones. The only other operator selling CDMA handsets with AWS chips is Leap Wireless. Those carriers overlap primarily in one market, Las Vegas, but the majority of CDMA handsets in the market still belong to Sprint and Verizon customers. Metro said it won’t offer the MetroFlash program in its AWS markets precisely due to that incompatibility. As Leap and Metro go head-to-head in Las Vegas, though, Metro may be tempted to make an exception in an effort to poach Leap’s customers, all of whom subscribe to similar unlimited local-area plans.

The integration issue may become more pronounced as Metro rolls out its major metro-area networks in Philadelphia later this year and Boston and New York City next year. Metro has said it plans to shift its handset portfolio entirely over to dual-band AWS-PCS phones and gradually upgrade existing PCS-only customers to dual-band device. That way it can allow customers to move among all of its major metro networks without service interruption. If a flood of PCS-only handsets comes from customers churning from Sprint and Verizon, though, Metro would only hinder its own attempts to unify its customer base.