Cricket To Exit Prepaid Broadband Market
During Cricket’s third quarter 2012 financial results meeting, they announced that they would be discontinuing their prepaid broadband service. Needless to say, I was pretty astonished! Cricket was actually the first prepaid provider to offer unlimited no contract broadband, so to hear them say they’re going to “de-emphasize” it is very surprising to say the least.
Why would they discontinue a service that has been growing even more quickly than prepaid wireless itself?! They said in the webinar that broadband was distracting to the core business (I’m paraphrasing of course). They basically said that their sales force couldn’t handle it. Trying to sell broadband is distracting them from the core business, which itself has not been doing well in recent years. In fact, I don’t believe Cricket has ever been profitable.
This sounds so odd to me. Cricket actually makes tens of millions of dollars in profit from its prepaid broadband service. And they’re saying that their sales team is so bad that it’s confusing them to the point that it’s impacting their ability to sell their core wireless service; really? Most companies would kill to have a business that earns tens of millions of dollars in profits; and here’s Cricket saying that they’re going to give up that profit to focus on their core business?
Needless to say, I think it’s a massive mistake. Prepaid no contract broadband is a hot market that they should be seeking to increase and innovate in their products and services. Perhaps their network can’t support the growth in broadband usage? I don’t know, however, I can’t help but feel they’re giving up a little quickly. Maybe they need to first look at their sales force.
If Best Buy, Radio Shack, and dozens of other retailers and dealers can sell multi-carrier prepaid products (as well as postpaid), and somehow figure out how to train, educate, and activate customers, why can’t Cricket figure out how to manage and sell its own products? It makes no sense! I expect that it also has something to do with their platform development bandwidth, whereby development for its core business is competing with the needs of its broadband business.
Anyway, I’m not sure when they’ll be officially turning the service off; however, I expect that it won’t be a hard cutoff. More than likely, they’ll simply discontinue selling prepaid broadband at some point. Then they’ll wait for existing customers to churn off (i.e. deactivate). In other words, it will take years to completely exit the market, and in the meantime, if you can find a Cricket broadband modem, you can confidently activate and use it for the foreseeable future.
I was hoping that with all of the change in senior management this year, that Cricket would be able to pull off a turnaround, however, this type decision makes me wonder what’s really going on over there. Whether Cricket can survive on its own in this highly competitive and ever-consolidating industry is still largely in question.
Personally, I would like to have my voice and broadband service from the same company, and ideally have some kind of benefit for having both services. Other companies that find a way to bundle these together will have an advantage over carriers that either don’t offer mobile broadband, or don’t find a way to bundle them together in a meaningful way. I look forward to seeing how this plays out!