Virgin Mobile (NYSE: VM) USA’s CEO Dan Schulman (pictured, right) has a front row seat to the latest trend in the wireless industry — a move by the mass market to adopt aggressively priced prepaid unlimited offers.
Schulman said prepaid interest has heightened recently as prices have fallen and perceptions have changed about the offering. Instead of it being the “poor cousin,” Schulman said cheap is chic and it has become a legitimate alternative in consumer’s minds. In fact, Virgin’s own market research has found that “well over the half of the population is willing to actively consider prepaid,” which represents an increase of more than 1,000 basis points over the past six months.
Prepaid adoption can easily be tracked through the growth of four major U.S. prepaid providers, which all are offering a $50 unlimited plan of some kind (See chart after the jump.). Last week, Boost Mobile, a Sprint (NYSE: S) subsidiary, added a jaw-dropping 764,000 subscribers and regional providers, Leap and Metro PCS, both reported year-over-year growth of more than 40 percent. Of the three, Virgin reported today that it actually lost subscribers during the first quarter, but said new pricing plans introduced during the tail-end of the period will make the company more competitive going forward. Together, the four providers represent an impressive 19.1 million subscribers.
In an interview with mocoNews, Schulman explained there’s two major forces behind this trend, and offered his perspective on how he believes the prepaid and postpaid markets will shake out in the near future.
His thoughts after the jump…
The economy and pricing is driving this trend: “Two things have absolutely occurred. The economy has made people much more cognizant on what they are spending, and prepaid over the years has gotten much more aggressive as opposed to postpaid. Although [prepaid] was growing slightly, it wasn
Despite half of the population considering prepaid in the U.S. market, only a small percentage is willing to change carriers from the big two of AT&T and Verizon. Sprint's Boost unlimited plan has demand as shown in the 4Q results. Virgin Mobile USA is competing with Boost. For Sprint, Boost maintains a direct customer relationship. For Virgin Mobile, Sprint is losing potential direct customers to a reseller relationship. Sprint continues its legacy of wholesaling. Can the Palm Pre save its direct selling and indirect retailer distribution?
Just curious … what does that poorly-Photoshopped photo and corresponding link add to the information in the table? Is this an inside joke that no one would care about anyway? Might be better to spend more resources on boring copy editing vs. gimmicks that detract from the publication's credibility.
I have used a Virgin Mobile prepaid phone since buying two of them ar $65 per for my self and my son about 12 years ago. I have been very dissappointed by the decline in customer service over the past year, and have been trying to use up my minutes so I can get rid of them and change to another company.
Having worked as a communications comsultant for New Jersey Bell for 30 years…I was appalled by my most recent contact with Virgin. I spoke with no less than 6 people in an attempt to resolve a matter concerning a Virgin phone I had ordered as a Christmas gift. Three of these folks claimed to be managers, although I am not convinced that is true.
Virgin Mobil was once a very flexible service with good value, but with the rude, condescending sing-song “suck it up” attitude expressed toward long established customers… I really feel this company is doomed.