Essentially, Virgin is creating a blank slate phone -- it can be
stripped as bare as a customer wants or loaded up with apps.
Sprint's offering has another lure beyond price: for an
additional $5, subscribers can claim unlimited access to one of
four social apps -- Facebook, Twitter, Instagram and Pinterest --
or three music streaming ones -- Pandora, Spotify and SoundCloud. For $15 a
month, they can get all the social media behemoths.
Sprint's move follows offers from Verizon and AT&T, in
February, meant to grab or retain consumers who are seeing their
phone data bills skyrocket. Earlier this week, T-Mobile, which kick
started the industry's price cutting shuffle, unveiled a four-line
plan boasting ten times the data access. In June, the fourth-placed
carrier also
added unlimited access to seven streaming services to one of
its plans.
Sprint insisted it was not responding to its brasher rival (and
possible acquisition target). "We've been working on this concept
since February," said Angela Rittgers, VP-marketing for Virgin
Mobile. "What we're doing is giving customers more flexibility in
terms of what they want."
Earlier this month,
CNet reported that Sprint was considering changes to its
'Framily' plan, introduced in February, that would remove unlimited
data as an offering from the carrier, which is shedding subscribers
as it oversees a major network overhaul.
The company said its newest plans will not gravitate to Sprint's
post-paid subscribers. "We do think it's a powerful platform that
could be leveraged in powerful ways," said Ms. Rittgers. "At this
point, we don't have plans to extend it across the other
brands."
To promote its new program, Virgin is leaning on the
family-friendly aspects of the phone. Parents who purchase Virgin
Mobile Custom will be able to limit the plans on a child's phone.
For example, they can set it to shut down all apps and calls after
10 p.m. In September, Virgin will also introduce a feature that
allows parents to control a child's phone from their own, with
software powered by ItsOn, a venture-funded technology company
Sprint began partnering with in June.
The carrier will run commercials created by Mother on Walmart's
in-store network. It will also unleash the retailer's army of mommy
bloggers.
Virgin selected its most popular apps for the plan and claimed
the platform companies were not paying for the service. Ms.
Rittgers said Virgin plans to add more apps to the package, but but
did not detail which ones nor deny the possibility of paid
arrangements in the future. At the onset, the program will run with
inexpensive smartphones: two from LG and one from ZTE, a Chinese
manufacturer.
Carriers in emerging markets have sold data packages that
subsidize Facebook, Twitter and other popular apps. One former
carrier executive said Vodafone tried a program similar to Virgin
Mobile's in the U.K., but closed it down after six months because
it failed to gain consumer momentum.
With its second quarter earnings on Wednesday, Sprint topped
expectations in its second quarter earnings, reporting revenues of
$8.79 billion and a net income profit, its first since 2007. Yet
the company continued to bleed subscribers, losing 245,000 monthly
subscribers, a slimmer number than the prior quarter.
In 2013, media spending from Virgin Mobile crossed $82.2
million, a 29% annual increase, according to the Ad Age DataCenter.
Sprint's total ad spend reached $1.55 billion.
The carrier's expenses fell during the quarter, in part, from
reductions in marketing, Joseph Euteneuer, the CFO, said on the
earnings call.
