Friday, October 30, 2015

In Defense of Sprint's $20 1 GB/Unlimited Entry Plan

There has been much negative reporting and commentary about Sprint's new rollout of the $20 starter 1 GB/Unlimited plan with 2G speeds after 1GB is used up.  Essentially, they're getting rid of an overage tax.  Rather than a negative take as reported by the Verge, BGR, Droid Life and Android Authority (all tech blogs) on the unattractiveness and that Sprint was "fooling" customers.  To be sure, FierceWireless also picked up on the negative groundswell in their piece.  When I tweeted about the negative plan, the Twittersphere also weighed in.

I'm not pro-Sprint or anti-Sprint historically, I try to have an even balance and call it as I see it.  I see it differently and can understand what Sprint is trying to do. Let's look at the wireless landscape today. 100% wireless penetration has been reached. That is, theoretically those who want a wireless phone/device have already got them.


Of the big four carriers, Verizon and AT&T have the lion's share of the coveted 'prime' and high-value postpaid users. Both are protecting their bases as best as they can and invariably, some high-value subs and low value subs leave for competitors.   It's been well documented that Verizon and AT&T have said that they'll let some of their subscriber base go to protect profitability.  I interpret those as mainly (not totally) as price sensitive and lower ARPU/ARPA/ABPU customers. Add to that in most every carrier, there are the feature phone users.  Every carrier wants to migrate those feature phone users to smartphones because they know that when new data capabilities are used, more get consumed and eventually, the customer upgrades to higher data levels. Verizon and AT&T have been losing those feature phone and entry data customers for many quarters. So for Sprint, they see that as opportunity.

My point here is that the new entry plan is not targeted to existing users who have been data use veterans but for subscribers who have not really tasted data, don't have a smartphone yet, price-sensitive, all or a combination.  Note the Sprint price comparison is against competitors' entry plans.  This is where I think the tech bloggers are missing the point as they're techies and are all data vets.


The other point of contention is that the vitriol concerning 2G. Yes, it is slow in today's LTE world. In today's environment, we even get upset when we're on 3G (EV-DO or HSPA). But the targeted sub may or may not care. MetroPCS before T-Mobile bought them out operated on LTE and a 1x fall back (MetroPCS never went to 3G) and yet they still promoted an 'unlimited' marketing message.  If subs did care, they'd jump to another competitive offering (likely in prepaid) or upgrade their data plan level (that's the point).

But why 2G and not 3G (EV-DO)?  My view on Sprint's thinking is that you don't want to have these entry/lower ARPU bearing customers contending for data on the 3G network that some of the higher ARPU bearing customers are using. That would be worse, alienating those customers and providing an overall bad user experience all around =-> churn.

Will it be successful? Ultimately, as a plan is designed, it comes down to sales and marketing execution in convincing the target segment that it's the best value/deal out there for what they're looking at.  Obviously, this plan is readied for the heavily promotion laden and competitive 4Q holiday season.  We'll see if competitors react.