Thursday, February 28, 2008

Sprint Returns A Shot in the Battle of the Bundle

By Saul Hansell (New York Times)

What do you do when you just lost nearly $30 billion and customers are fleeing? How about slashing prices to win back business? Sprint Thursday, as expected, introduced its version of an unlimited use wireless plan. Called “Simply Everything,” the plan is at the same $99 price point plans introduced by Verizon, AT&T and T-Mobile. But Sprint includes everything: voice, messages, data, G.P.S. and TV broadcasts. Verizon, for example, charges $139 for the same package. Daniel R. Hesse, Sprint’s new chief executive, told investors in the conference call that the unlimited plan will not be anywhere near enough to stem Sprint’s losses of customers, according to Silicon Alley Insider’s write up of the call. Fewer than 10 percent of wireless customers are in the market for plans that expensive, he said. But the high-end customers are worth fighting for. More interesting will be whether Sprint takes the price war to the mainstream. Mr. Hesse said the company would also introduce an $89 unlimited voice plan with fewer features. And it will streamline its cheaper plans, seemingly lowering the prices for bundles of voice and data services. For now the leading companies are saying they won’t need to cut prices. Dennis F. Strigl, Verizon’s president, told CNBC earlier this week that its unlimited plan “isn’t about launching a price war.” And he dismissed the prospect of further price cuts from Sprint:

What Sprint may go after is not our market. Our market is the customer who wants the high-quality network, good customers service and the dependability of a bill that they know will be about the same every month. So if Sprint goes after the low-end market, that’s not what we’re focused on.

Of course, that is what you would expect him to say. My guess is that the average price for the wireless plans may not fall. But customers will see fewer add-on charges for text messages and other services as the battle of the bundle escalates.

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