Boost Mobile's smartphone further clouds Sprint Nextel's prepaid plans

Feeling a little confused about Sprint Nextel Corp.’s (S) prepaid strategy? Well just wait until next month when the carrier’s Boost Mobile brand begins offering a smartphone with price plans that undercut those offered by its data-centric Virgin Mobile USA offering.
Boost Mobile announced yesterday that it will begin offering Samsung Electronics Co. Ltd.’s Galaxy Prevail smartphone next month for $180 on its unlimited rate plan that begins at $50 per month. That plan includes unlimited calling, data, messaging, e-mail and 411 calls, as well as includes Boost Mobile’s “Shrinkage” offering that cuts the price by $5 per month every six months if a customer pays their bill on time. This results in a per-month price of as low as $35 per month after 18 months of good behavior.
The device will join the previously offered Research In Motion Ltd. BlackBerry Curve 8530, which requires a $10 premium per month.
This seems like a pretty sweet deal for a smartphone and even more so when compared with what Virgin Mobile USA is charging for similar service. Virgin Mobile USA’s “Unlimited” offering includes the same features minus the 411 calling for $60 per month, with no drop in monthly charges for on-time payments. Virgin Mobile USA does offer different smartphones in the LG Electronics Co. Ltd. Optimus V and Samsung Intercept, both of which retail for $200 and offer similar features and the same Android operating system to Boost Mobile’s Galaxy Prevail.
The new device for Boost Mobile furthers that brands evolution from an iDEN-based prepaid outlet for Sprint Nextel to a more rounded brand offering that now includes basic calling phones, messaging devices, touch screen feature phones and now Android-powered smartphones.
The move also brings Boost Mobile’s offerings closer to its stable mate Virgin Mobile USA.
Shortly after it was fully absorbed by Sprint Nextel in late 2009, the Virgin Mobile USA brand was re-targeted towards customers looking for more data-centric and messaging services as compared with the more voice and messaging centric offering from Boost Mobile. That re-branding took a bit of a turn when Sprint Nextel added the voice-centric PayLo service under the Virgin Mobile USA umbrella.
Virgin Mobile USA Chief Marketing Officer Neil Lindsay said at the time that the new offering would not muddle the brands overall message.
Sprint Nextel said it could not comment on the latest move by Boost Mobile as it was preparing for its first quarter earnings release.
(The launch of the PayLo offering followed the launch of a more traditional prepaid Common Cents brand launch under Sprint Nextel’s overall prepaid scheme.)
Looking to bolster the data-centric focus of the Virgin Mobile USA brand, the company last year launched an unlimited mobile broadband rate plan at the $40 price point that undercut just about everyone in the industry. The move appeared to have been popular as Virgin Mobile USA recently cut back on the unlimited-ness of the service by saying it would throttle network speeds once a customer hit 2.5 gigabytes of data usage in a month.
However, following the upcoming expansion of smartphones from Boost Mobile the differentiation between Virgin Mobile USA seems to be narrowing. Virgin Mobile USA does continue to be the only prepaid brand from Sprint Nextel offering mobile hot spot devices and wireless modems, while Boost Mobile continues as the exclusive prepaid outlet for iDEN devices that can take advantage of the carrier’s push-to-talk service.
In addition to Virgin Mobile USA, Boost Mobile and Common Cents, Sprint Nextel also operates the Assurance brand that offers subsidized services to low-income customers in select states.
Prepaid remains a hot segment for Sprint Nextel, which contributed a majority of net customer additions for the carrier during the fourth quarter of last year. The segment could prove even more important for the carrier as it faces further industry consolidation following AT&T Mobility’s plans to acquire T-Mobile USA Inc., which had been one of Sprint Nextel’s main rivals in the prepaid space.