Sprint Widens Prepaid Strategy with $20 'payLo' Plan

By Tara Seals

Slicing prepaid segmentation even farther than it already has, Sprint-Nextel Corp. has announced a 20-buck prepaid offer for the voice-centric, low-volume user (whoever they may be, some in the trade press would add).

Sprint launched the appropriately named payLo offer under the Virgin Mobile USA brand, a 400-minute plan for $20 per month, with minutes as low as 5 cents. Theres also a second option for low low low volume users, of adding $20 to maintain an active account for 90 days with a basic rate of 20 cents per minute. No activation or termination fees, either, as with most prepaid offers. It will be available in July at drug stores and convenience shops, and at Best Buy and Radio Shack.

Neil Lindsay, CMO at Virgin Mobile USA, noted that prepaid is the heart and soul of the Virgin Mobile brand, a brand also known for its focus on the youth market, which tend to be texters and data users. payLo expands that focus to include voice aficionados, presumably those using it for emergencies only, the elderly and the unbanked, among other segments. It will launch on two phones, the LG10 ($19.99) and the Samsung M340 ($39.99), and will offer voice mail, text messaging and caller ID only.

Sprint has implemented a multi-brand strategy for its prepaid business as of May 2010, slicing and dicing the target markets with focused brands and sub-brands.

Virgin Mobile has led the micro-defining initiative, but has been focused more on data. For instance, it recently launched an unlimited messaging, e-mail, data and Web Beyond Talk plan for $25 a month for 300 voice minutes, and a new high-end handset lineup that includes the Blackberry Curve, the LG Rumor Touch and the Kyocera Loft. Two other Beyond Talk unlimited data/SMS plans include $40 to add 200 minutes of voice per month, and $60 for unlimited voice. Also for the first time, Virgin Mobile customers can add Blackberry data service to any of these plans for just $10 more, enabling a $35 plan consisting of both voice calling and Blackberry data service. The payLo addition obviously adds a very different niche to the mix.

In the first quarter of 2010, more than half of Sprints mobile gross additions in the U.S. selected prepaid, and the carrier predicts that approximately 70 percent of the net adds in 2010 will choose plans without a contract. Dan Schulman, president of Sprint’s prepaid group, noted that “this is the year that prepaid moves to the forefront of the wireless industry. With almost 60 million people now on prepaid service, the no-contract market has clearly moved beyond the credit-challenged and lower income segments. The prepaid market has changed dramatically, with customers across multiple demographics and lifestyles demanding a wide variety of handsets, features, and plans tailored to their specific needs and wants.”

He added: “Since we expanded distribution, lowered the price, and added more data capacity without changing prices, sales have tripled,” said Schulman. “We’ll continue to enhance this product line as well, possibly under multiple brands to include new services and the very latest in high speed networks, including 4G where available.”