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Prepaid Wireless Tracker #45, March 2012 - Prepaid iPhone to Shake Up Wireless Industry!
March 01, 2012

Prepaid Wireless Tracker - March 2012 Issue


Prepaid wireless is a growing and truly exciting industry.  At I try to provide you with in-depth information that isn't readily available anywhere else.  Its content is original, and created from firsthand experience working in the prepaid wireless industry.

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Prepaid iPhone Set to Disrupt Wireless Industry
Wireless Week
This article speaks of TracFone's Straight Talk brand enabling a means of activating iPhones on its unlimited prepaid service via a prepaid SIM card.  Easy access to iPhones on prepaid plans will certainly cause some market disruption.  The article, however, is wrong when it states that this is currently not possible.  There are numerous ways to get an iPhone on a prepaid plan, though it usually takes a little more knowlege, and the average consumer may not know about it, or care to go figure out their options.  The real question of the day is when will a prepaid carrier proactively offer its customers the iPhone as part of its device lineup.  It seems like an innevitable eventuality!

Virgin Mobile Wins Top Rank Overall Customer Satisfaction by J.D. Power
EON: Enhanced Online News (press release)
Virgin Mobile deserves cudos for winning the number one spot for customer satisfaction, including the largest improvement year over year.  This progress seems in-line with Sprint's overall focus on improving the customer experience across its postpaid business as well.  They'd better not celebrate for too long though, as this is a fast-paced industry, and staying number one for a second year may not prove to be very easy.  There's no doubt that the customer experience is at the top of most carriers (both prepaid and postpaid) list of priorities, as they've come to appreciate that keeping existing customers is far easier (and cheaper!) than trying to capture new ones.  This is the typical thought process in any maturing industry.

SIMPLE Mobile Partners with Fry's Electronics to Promote Unlocked Handset Usage
EON: Enhanced Online News (press release)
With Simple Mobile's partnership with Fry's they have created a fantastic means of educating prospective customers regarding their Bring Your Own Phone program, which allows customrs to use more than 200 approved GSM devices with its affordable no contract service.  Believe you me, it won't be long (ok, maybe the better part of 10 years) before North America becomes more open, allowing customers to activate any compatible phone on the service provider of their choice per the European model.  This would result in higher handset prices, and carriers would need to innovate in other areas other than device differentiation, however, in the long run, consumer pricing would improve, and our options would increase.

PlatinumTel Launches New Unlimited Plans
MarketWatch (press release)
PlatinumTel announced the launch of its revised unlimited plans; a $45 and $55 plan both with unlimited talk and text, with the former including 150MB of data, while the latter includes 2GB of data.  While still not in the realm of other similar services that include unlimited data as well, it's closer to the market reality than it was before.  Also note that these plans on Android smartphones will cost you $5 more per month.

Ready Wireless Partners with Telespree Communications
Bradenton Herald
This partnership with Telespree will result in a handset application that will allow users to monitor their mobile broadband data usage (not phone usage).  This will be a nice way to enable mobile broadband users to ensure we topup our account before running out of data in our monthly bundle.  This application also begs the question as to whether Ready Mobile will eventually offer a pay-as-you-go mobile data offer to its portfolio; something that wireless customers have been begging for from prepaid wireless broadband providers for a long time.  Currently TruConnect is the only prepaid provider that offers this capability.  Also, something else to take notice is the indirect announcement that Ready will be adding a mobile hotspot device to its portfolio, though their website does not yet reflect its availability.

Mixed Results for Leap Wireless
Overall, Cricket Communications (a subsidiary of Leap Wireless) reported pretty decent subscriber and revenue growth compared to previous quarters, however, they still managed to lose over $84M.  It never ceases to amaze me how relatively large U.S. companies can sell so much product, however, still manage to lose money.  I suppose that's the American way.  However, when all is said and done, companies need to be profitable or someone (i.e. investors) will ultimately need to eat the loss.  Hopefully 2012 will show an even larger turnaround with greater strides towards profitability as it continues to rollout its 4G strategy, and focus on its smartphone portfolio.

Cricket Likely to Proceed with International Muve Licensing
Wireless Week
With the success of its unlimited Muve music offering (now over 500K subscribers), Cricket announed that it has plans to expand the service to international prepaid wireless providers via a licensing deal.  This is definitely an interesting new venture that could yield a meaninful cash flow proposition for the struggling carrier.  That said, while I don't know the specific financials, I would venture to conclude that with the current pricing Muve in its current flavor doesn't drive a lot of net profit for the company due to low margins, but rather contributes to longer customer lifetime value due to the stickiness of the service in conjunction with smarthphone users.  While it's far to early to declare success, at this point in time it certainly holds a lot of promise.

Apple Will Not Make a Cheap iPhone for Prepaid Wireless
This articles makes a lot of sense, HOWEVER, the iPhone really isn't any more expensive to produce than any other high end smartphone. In fact, it's arguably less expensive given it's small screen, generally lower specs, and high production volume. Apple simply chooses to maintain a high margin, and the allure of better quality  In addition, despite the nice premium look and feel of the phone's casing, most people put it in a case to either personalize its look, or out of necessity to combat its antenna defect.  That said, the prepaid market WILL have the iPhone one way or the other, whether via phone unlocking (see above Simple Mobile article), or via direct deals with prepaid wireless carriers; it's only a matter of time!

Sprint Fails to Purchase MetroPCS
Apparently the deal was close to being announced when the Sprint board of directors trashed it.  Other articles noted that the cost was simply too high, and would dilute the value of the Sprint stock even further once investors weighed in, as they were going to pay a 30% premium.  The article notes that MetroPCS shareholders would own one third of the combined company.  To me that makes absolutely no sense given the scale of the Sprint business versus that of Metro; something simply doesn't smell right with this deal.

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