Citing increasing demand for its overage-protecting Fair & Flexible rate plan offerings, Sprint Corp. said it will no longer offer its traditional Free & Clear rate plans to new customers. Sprint added that the decision also was made in an attempt to cut down on 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 that went over the bucket of anytime calling minutes were charged 40 cents per minute. The F&F plans provide a similar bucket of minutes for a fixed rate, then charges customer between $5 and $10 for a bucket of between 100 and 200 overage minutes, depending on the base rate plan.
Analysts have noted that the F&F plans have increasingly become 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 that the F&F plans were the only ones being offered by the carrier.
“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 current offering for as long as they want.
T-Mobile USA Inc. has 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 they are getting close to depleting their bucket of minutes included in their monthly allotments. Once there are no anytime minutes left, a customers’ 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 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 calling 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 telecommunications analyst Jonathan Atkin noted that 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 for the carrier if managed.
“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 explained. “We would be potentially concerned if this feature becomes so popular that it leads to significant peak-hour congestion and accelerates additional capacity-related [capital expenditures].”
Cingular Wireless L.L.C. and Verizon Wireless recently have taken an opposite approach to their night/weekend calling minutes with both carriers rolling back the ending time of the feature from 7 a.m. to 6 a.m. Cingular does allow 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. continue to offer traditional 9 p.m. to 7 a.m. unlimited night/weekend calling on select plans.
