Citing increasing demand for its overage-protecting Fair & Flexible rate plans, Sprint Corp. said it will no longer offer its traditional Free & Clear rate plans to new customers. Sprint said the move also should reduce pricing confusion.
“We are taking as much confusion as possible out of choosing a wireless plan,” explained Sprint spokeswoman Emmy Thomas.
In addition to the lower overage charges, Thomas added that Sprint has found that F&F customers have shown higher levels of customer satisfaction than F&C customers. Analysts have noted this is likely due to the lower overage charges compared with traditional rate plans.
The F&C plans offered customers a fixed bucket of anytime calling minutes along with unlimited night and weekend calling minutes. Customers who went over the bucket of anytime calling minutes were charged 40 cents per minute. The F&F plans provide similar buckets of minutes for fixed rates, then charge customers between $5 and $10 for buckets of between 100 and 200 overage minutes, depending on the base rate plans.
Analysts have noted that the F&F plans are becoming the de-facto rate plans offered in most Sprint retail locations, as well as the focal point of Sprint’s advertising. Merrill Lynch telecommunications analyst David Janazzo noted in a research report last month that after visiting a Sprint store, it seemed the carrier was offering only the F&F plans.
“Customers need to explicitly ask for the Free & Clear plans if that is what they want,” Janazzo observed. “Generally, after discussing the Free & Clear plans, the salespeople still suggest the Fair & Flexible, selling it as a better alternative because it `eliminates unfair overage.’ “
Current F&C customers can continue with their existing rate plans as long as they want, Thomas said.
T-Mobile USA Inc. reportedly launched a similar overage protection plan, dubbed Take Control, in Boston and Austin, Texas. The plan costs $5 per month and sends a customer a text alert if the subscriber is getting close to depleting the bucket of minutes included in the monthly allotment. Once there are no anytime minutes left, a customer’s phone is prevented from making outgoing calls to prevent overage, though night and weekend calling is still permitted.
Customers can add anytime calling minutes using prepaid cards for 10 cents per minute in increments of $10, $25, $50 and $100. The top-up rates are one-fourth of the 40 cents per minute T-Mobile USA charges for traditional overage, and any unused top-up minutes can be carried over to the next month.
Sprint also has launched a 6 p.m. night/weekend option that allows customers to begin accessing their unlimited night/weekend calling minutes three hours earlier than the traditional 9 p.m. for $10 per month. Sprint will continue to offer its previously available 7 p.m. night/weekend calling option for $5 per month.
RBC Capital Markets analyst Jonathan Atkin noted the 7 p.m. option was getting about a 25-percent to 30-percent take rate, and that the 6 p.m. option could be positive if managed properly. “We view this development as neutral to potentially slightly positive for Sprint as this option isn’t offered elsewhere and could be accretive to [average revenue per user],” Atkin said. “We would be potentially concerned if this feature becomes so popular that it leads to significant peak-hour congestion and accelerates additional capacity-related capex.”
Cingular Wireless L.L.C. and Verizon Wireless recently have taken opposite approaches with their night/weekend calling minutes, with both carriers rolling back the ending time of the feature from 7 a.m. to 6 a.m. However, Cingular allows customers to extend the beginning of its night/weekend calling minutes from 9 p.m. to 7 p.m. for $7 per month.
T-Mobile USA and Nextel Communications Inc. offer traditional 9 p.m. to 7 a.m. unlimited night/weekend calling on select plans.
