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.

Alcoa to fight Bahrain allegations (Pittsburgh Business Times)

Alcoa Inc., accused of overcharging and fraud by a company controlled by the Persian Gulf state of Bahrain, said it is unaware of wrongdoing and will "vigorously defend" itself in a lawsuit. The lawsuit was filed in federal court in Pittsburgh by Aluminum Bahrain BSC, the Wall Street Journal reported in its Thursday edition. According to the suit, Aluminum Bahrain alleged that New York-based Alcoa (NYSE:AA) steered payments for an aluminum precursor ingredient to a group of companies abroad in order to pay kickbacks to a Bahrani government official. The firm also alleged that Alcoa had overcharged it for the precursor material, alumina. Alcoa spokesman Kevin Lowery said the suit was filed late Wednesday, "so we have not had an opportunity to completely review the allegations. "However, we are completely unaware of any wrongdoing by any Alcoa employees or representatives," Lowery said. But, Lowery said, Aluminum Bahrain contacted Alcoa two weeks ago. "They gave us two weeks to investigate the claims and to settle. That's not enough time to do any serious work. In that time frame, we did a fast review and haven't found anything that deviates from our normal practices. We offered (Aluminum Bahrain) an opportunity to do a full review of the last 20 years, but obviously they chose to immediately file a lawsuit instead. "We will vigorously defend ourselves in the matter. We have a strong commitment to compliance and don't tolerate any improper conduct by any employee," he said. Attorney Mark J. MacDougall of Akin, Gump, Strauss, Hauer & Feld, which represents the Bahraini manufacturing firm, could not immediately be reached for comment.