Sprint Nextel launched a new service plan Thursday that let's subscribers make unlimited calls to any U.S. cell phone without using up voice minutes.
For just $69.99 a month, the new Any Mobile, Anytime plan allows subscribers to call any cell phone in the U.S., regardless of the carrier. The plan also comes with Sprint's Everything Data plan, which includes unlimited text messaging and data services. Subscribers also get 450 voice minutes for calls to landlines. Subscribers already signed up for the Everything data plan will automatically be upgraded to the new Anytime Mobile plan. And a family plan for four people will cost $170.
"We don't think our customers want to have to keep track of or only talk to friends, colleagues or family members who make the same choices they do," Dan Hesse, Sprint's CEO, said in a statement.
The flat rate voice plan comes at a time when prepaid unlimited phone services have put pressure on fledgling national providers, such as Sprint. Some prepaid phone services, such as MetroPCS and Cricket Wireless offer unlimited calling for $45 a month or less. Earlier this year, Sprint announced it was buying Virgin Mobile, another prepaid wireless provider that offers flat rate pricing, to get a bigger piece of the prepaid action.
But even before flat-rate prepaid plans became popular, the big four nationwide cell phone operators began offering bundles of unlimited voice service. Over a year ago, Verizon Wireless was the first to announce a $99.99 unlimited voice plan followed by AT&T and T-Mobile. Sprint was the last of the big four to announce its unlimited plan, but it now offers the most comprehensive plan. For $99.99, Sprint's Simply Everything plan gives customers unlimited voice minutes, data, text, e-mail, Web-surfing, Sprint TV, Sprint Music, GPS Navigation, and push-to-talk.
The new Any Mobile, Anytime plan essentially discounts this service for subscribers who only talk to other cell phone users by $30.
The move to make all mobile-to-mobile voice minutes part of a flat rate plan is yet another indicator that voice revenues are getting squeezed in the cell phone market. This is good news for consumers who might see competitors fighting back with lower pricing on their plans. But most likely big players such as AT&T and Verizon Wireless are likely to add more mobile-to-mobile features to their existing plans rather than lowering their prices, says analyst Craig Moffett of Sanford Bernstein.
Clearly, Sprint is using this new pricing plan as a way to stop the blood-letting of customers. Even though the company already offers some of the lowest priced and comprehensive plans on the market, customers have been fleeing Sprint to go to other carriers for several quarters. As its total subscriber base shrinks with each quarter, a mobile-to-mobile plan that allows subscribers to call other Sprint customers holds little value to customers.
In a way, the new service is like T-Mobile's MyFaves program, which allows users to make unlimited calling to frequently called numbers on any network. AT&T announced its own version of this type of plan earlier this week, which it calls A-List. And Verizon Wireless has a similar plan called Friends and Family.
While the new pricing structure may help Sprint keep some customers, it will likely come at a high price for the company. Moffett postulates in a research note written Thursday that some of Sprint's highest volume callers already subscribing to the $99 Simply Everything Plan could downgrade to Any Mobile, Anytime plan, which would slash the company's revenue.
What's more, Sprint's new service is essentially encouraging customers to make more calls to other carriers' cell phones, which means that Sprint will have to pay the cost of connecting those calls, Moffet said in his note.
"By stimulating demand for outbound wireless calls, the company is effectively opening the door to increased wireless settlement charges, which are statutorily higher than wireline termination charges," he said.
At least for now, Sprint believes that the trade off is a risk it's willing to take as the company tries to repair is sullied reputation. Despite the fact that various surveys indicate that Sprint has improved its service and customer service, the company has so far been unable to shake its bad reputation.