With competitors cannibalizing and usurping its once unique position in the wireless industry, Leap Wireless International Inc. said it plans to emerge from Chapter 11 bankruptcy protection later this year with new offerings and services that the carrier said it hopes will allow it to stay ahead of the competitive curve. But at the same time, those offerings could draw the once-renegade carrier closer to the mainstream of wireless offerings.
William Freeman was recently named chief executive officer of Leap’s Cricket Communications Inc. subsidiary and is scheduled to replace current Leap CEO Harvey White once the company emerges from bankruptcy protection. Freeman said Leap plans to expand its focus from local services to a more broad-based offering designed to attract a larger customer base. That expansion is expected to include a more coherent data service, including downloadable content and picture-messaging capabilities, the addition of roaming capabilities outside of current Cricket markets and the possibility of tapping into both its spectrum and financial portfolio to expand its reach.
“We want to make sure there are not gaps in our product offering,” Freeman said. “The fundamental goal is to mine as much out of the market as possible.”
Since its inception, Leap’s Cricket service has found its niche among wireless customers who wanted to stay away from contracts and credit checks and had little need for roaming out of their home service areas. The carrier initially offered unlimited local calling service for about $30 per month. The service proved successful as the carrier quickly expanded service to 40 markets and signed up around 1.5 million customers.
Leap has modified the service since its 1998 launch to include unlimited long distance and text-messaging capabilities, as well as contracting its poorly received Slice “data” service and operations in one market.
Freeman explained that while Leap’s current business model is sound, the carrier needs to “tweak its fundamental model” as wireless consumer needs are beginning to broaden and expectations are increasing.
“The marketplace is demanding the change,” Freeman explained. “Standing pat is a prescription for long-term failure.”
Data services should not be a stretch for Leap as the carrier already operates a CDMA 1x network in a number of its markets and recently announced a BREW initiative for downloading content to handsets. Leap also has begun to offer more technically advanced handsets, which in addition to supporting the BREW platform and sporting color screens, include cameras for the yet-to-launch picture-messaging service.
Analysts have harked on Leap’s lack of a data offering, noting nearly all its competitors offer downloadable content and picture-messaging capabilities.
Smarting from the cool reception to its Slice offering, which provided short voice infotainment clips between when customers hit send on their phones and when the call is connected, Freeman said any future data service would be more compelling.
“We will not allow our service to devalue the brand,” Freeman added. “Cricket will not become a second-rate carrier.”
Freeman also said the company was looking at offering roaming capabilities to its customers, noting the service would appeal to some users. Up to this point, Leap had avoided roaming relationships, which would likely not favor the carrier because its urban-based network probably would see a higher ratio of outcollect roaming. Nevertheless, Freeman noted customers now expect such capabilities.
Leap is also looking at partnerships with long-distance and prepaid providers to round out its portfolio, which Freeman said would be too expensive and slow to market to develop in-house.
“Interest in bundled offerings are growing, and I don’t think customers will move away from that concept,” Freeman explained.
With a number of spectrum licenses in its portfolio still sitting fallow and an increasing number of licenses being shopped around, Leap is also looking at possibly expanding its reach, though Freeman said any growth plans would be “controlled.” Leap has announced a number of deals during the past several years to sell what it called excess spectrum in both launched and Cricket-free markets and was fairly aggressive in the government’s attempt to auction NextWave Telecom Inc.’s spectrum in early 2001.
“Emerging from bankruptcy will allow us to look at our financial profile, and any moves we decided to make would have to be make financial sense,” Freeman said.
