Virgin Mobile faces stiff competition

Correction: Virgin Mobile began selling its $50 unlimited plan in April after the first quarter had ended.

Competition in the prepaid cell phone market is heating up, making it more difficult for companies, like Virgin Mobile USA, to hold onto subscribers in an increasingly crowded market.

Virgin Mobile USA, a longtime player in the prepaid cell phone market, reported Monday it had lost a total of 133,292 net customers during the quarter to end the period with 5.2 million subscribers. Even though subscribers were up 2.8 percent compared with last year, the company's losses during the quarter point to growing competition in the prepaid market.

The market appears to be especially competitive when it comes to flat-rate, contract-free wireless services. Regional players Leap Wireless International and MetroPCS, which have long offered cheap flat-rate services, reported strong subscriber growth during the first quarter, as they each expanded into new markets. And Sprint Nextel's Boost Mobile, which began offering its $50 unlimited plan in January, also added about 764,000 new subscribers in the first quarter.

Virgin Mobile, which had been successful in the past selling pay-as-you-go service in the U.S. market, lowered the price of its all-you-can-eat plan in April to $50 a month, as well. The company also launched the Pink Slip Protection program, which offers customers who have lost their jobs free service for three months.

Virgin Mobile has managed to improve its churn rate, or the rate at which subscribers leave its service. The company reported that its churn fell to 4.8 percent from 5.1 percent during the same period a year ago.

The company sees the $50 flat-rate plans and other "hybrid" plans, which offer a set number of minutes at a standard price without a contract, as its growth engine for the future. Chief Executive Dan Schulman said that 55 percent of the gross customer additions during the quarter came from "hybrid" plans, according to the Wall Street Journal.

This makes sense given that consumers say they are considering prepaid cell phone services as a way to reduce costs and avoid lengthy carrier contracts.

[baconstang]

Been using them for almost 5 years...... I likey.

[AcidicLemons]

I used to have a Virgin Mobile phone for the longest...but I switched. They don't offer a selection of popular phones; just the ones that they have, which aren't very attractive to me. They're good starting phones, though. Another thing that was annoying was the lack of service in my area.

[CadMan718]

Virgin Mobile is a good service i've been using them for like 5 years as well. I was hoping hat since they bought Helio they would intergrate that service into theirs better than they have. The Helio pricing is still way too high for a Family plan. The phone prices have come down which is good. I agree with AcidicLemons that their phones are the prettiest, but they aren't bad for the price. I like the new X-TC, can't wait to check that out. http://www.virginmobileusa.com/phones/phoneDetail.do?skuId=VMM200

[alenas]

it is NOT GSM - so can not use iPhone or G1 on Virgin network...CDMA is crap...

[ahumanbean]

GSM is an inferior service that is only popular because Europe decided to adopt it across the board instead of using CDMA. You will find CDMA has better coverage, faster broadband and is a technically superior products with greater future growth.

[kieranmullen]

The plan I am on (which I am not sure is still offered?) Is $15 every 5 months if paid via credit card, but the nice thing is that it rolls over and does not. I got a cheap phone for $20 shipped free and it came with $20 worth of airtime. Not bad. If I want pictures I will use my Digital SLR thank you.



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[Universal_Indie_Records]

I think they're main problem is that there is almost no advertising. I haven't seen a virgin mobile commercial in ages.

[PrepaidWirelessGuy]

Things are definitely heating up! To help people zone in on the right plan for them, feel free to use this free resource: http://www.prepaid-wireless-guide.com/compare-prepaid-plans.html

[jofssie]

I tried them a while back but the coverage was just too spotty. I now use a NET10 prepaid which has better coverage and equivalent pricing. I was under the impression though that all the prepaid providers were growing this last quarter, this is the first I hear of a prepaid company losing customers.

[AppleSuxLeo]

A lot of Virgins would love "stiff competition".

[Poshie232]

It is amazing Jofssie that all the prepaid's are doing well and gaining customers from the contract market and yet Virgin is loosing, I think this just goes to show that they don't offer nearly enough service or coverage. I have a Tracfone which is so cheap and has such fantastic coverage that I don't ever have problems with reception. The coverage in my house is so good that I am canceling my land line as well because I can make long distance and international calls for the same price as a local call. Who would stay with Virgin when Tracfone is around?

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