Boost Mobile’s decision to refocus its efforts on parent company Sprint Nextel Corp.’s iDEN network may be just what the doctor ordered – or a way to make the iDEN network a more attractive acquisition target.
After launching a trial of an unlimited offering on Sprint Nextel’s CDMA network to compete with the likes of Leap Wireless International Inc. and Metro PCS Communications Inc., Boost last month unveiled a $50 per month all-you-can-eat plan that will operate on the iDEN network, where Boost originated its service. Further, Boost noted that no new customers would be added to the CDMA network.
“The CDMA trial was always a trial,” said Justin Brennan, director of prepaid services for Boost Mobile. “The same opportunity could have been present with CDMA, but iDEN was a better fit for our demographic.”
This demographic includes connection-centric customers, more so than data-centric customers, Brennan said. Boost aims to recruit customers whose main concerns are making voice calls and sending texts. The iDEN network is more appropriate for that, Brennan said.
“The iDEN network does not deliver data speeds comparable of CDMA right now,” Brennan said. “It scratches the surface, but it is not for downloads or mobile TV. If you want streaming video and streaming music, Boost isn’t right for you.”
About 1 million Boost customers are on the CDMA network, Brennan said, and the carrier will continue to support those customers as long as they choose to stay with the service. Boost will not offer new CDMA handsets, but if a CDMA Boost customer has a compatible handset, they’ll be able to sign up for its $50 unlimited plan without switching over to an iDEN phone.
Capacity concerns
While Sprint Nextel’s struggling iDEN operations may have welcomed Boost with open arms, the carrier’s CDMA network might have been anxious to remove it from its already-crowded network. Brennan noted that the CDMA network might not have been able to support the growth Boost was looking for as well as the iDEN network.
Peter Jarich, analyst at Current Analysis, agrees that capacity could have been a deciding factor for moving Boost’s unlimited plan back to iDEN.
“This can improve performance for CDMA guys,” Jarich said. “Besides the capacity issues, CDMA does suffer from sub-breathing with more people on the base station. Things like cell shrinking happen.”
Further, Jarich is sure that a move to iDEN will be beneficial for the iDEN network itself.
“It is clear that this is going to give a ‘boost’ to traffic network on iDEN,” Jarich noted. “It is an asset that’s under-utilized and there has been some difficulty with old iDEN subscribers. This is not a bad idea in terms of keeping that network alive.”
Ulterior motives
Keeping iDEN alive and attractive might be an ulterior motive for Sprint Nextel. The carrier has lost millions of iDEN customers since acquiring Nextel Communications Inc. in 2004. In fact, many reports have claimed that Sprint Nextel has been actively seeking a suitor for its iDEN network.
“We’re interested in re-invigorating this network,” Brennan said. “It just needs to target the right segment.”
Pete Dailey, of Stratecast, said focusing Boost on iDEN will provide Sprint Nextel with what he calls a “rigid segment fence.” It provides unlimited options on both networks and extends across two sets of customers.
“Basically what this has done is created a fence between the two customer segments,” Dailey said. “Customers who want an all-you-can-eat plan but are very price conscious can go to Boost, but customers who have the ability to pay $100 a month and are more interested in data can go with Simply Everything. You don’t have that cannibalization of your low end and high end segments.”
A “hopefully temporary” Boost Mobile sign covers a former Cricket Communications store in Denver, Colo.Photo by Allie Winter
Further, Dailey said Sprint Nextel will benefit from the fact that iDEN prepaid customers aren’t able to take their device to another domestic carrier.
But putting iDEN up for sale might still be a possibility down the line. Sprint Nextel’s decision to increase Boost’s reliance on the iDEN network doesn’t necessarily mean that notion is squashed. In fact, Jarich said, it might make selling iDEN even easier.
“If I was someone looking to buy that, I’d be much happier to know that I get that number of customers,” Jarich said. “I would see it as a good asset.”
While Sprint Nextel has repeatedly assured its commitment to iDEN, it’s not planning on upgrading or improving that network anytime soon. James Fisher, spokesman for Sprint Nextel, said it has not announced any upgrades of the iDEN network beyond the current quality level on which it operates today. This also puts WiDEN to bed, the iDEN upgrade that Nextel was planning on before being acquired.
“We have no plans for that at this time,” Fisher said.
