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Sprint Spills Beans on Plan for Prepaid Smartphones

Sprint Spills Beans on Plan for Prepaid Smartphones
By Jennifer LeClaire

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"From what I've seen, Sprint may just be offering 3G data speeds, which would position the prepaid service as something that would not cannibalize its more profitable post-paid programs," said analyst Weston Henderek. "Of course, the drawback would be that it's a much less competitive offering" compared with Sprint's rivals.

Sprint may be readying to shift its competitive strategy. A graphic on its Web site indicates the company will soon offer a service called Sprint As You Go.

The graphic announced "something to celebrate" and indicates it will roll out the new program on Jan. 25. The program will offer Sprint-branded no-contract phones and plans for customers who prefer no annual contract and more flexibility managing monthly payments.

We caught up with Weston Henderek, a principal analyst at Current Analysis, to get his take on the quasi-announcement, which is stirring the rumor mill this afternoon. He told us Sprint probably did not mean to publish the graphic, but it appeared on the wireless carrier's Web site while it was preparing for the launch. Still, he said, it appears legitimate.

"This would be an interesting strategy change for Sprint," Henderek said. "They've always relied on their sub-brands -- Virgin Mobile and Boost -- to provide prepaid service. For Sprint to provide prepaid service under the Sprint brand would be a big shift."

What Sprint Offers

The graphic shows four phones, which include smartphones and feature phones: the Samsung M400 for $49; the Samsung Array for $79; the LG Optimus Elite for $149; and the Samsung Victory for $249.

"Obviously, we don't know any of the real specifics beyond what's been floating around today. But from what I've seen Sprint may just be offering 3G data speeds, which would position the prepaid service as something that would not cannibalize its more profitable post-paid programs," Henderek said. "Of course, the drawback would be that it's a much less competitive offering than a lot of the other prepaid services that are out there."

Henderek repeated that it's too early to tell right now how the new service would shake out. But one interesting point to ponder is Sprint's overall network consolidation plans and how that could play out in this new prepaid effort longer-term.

"Virgin Mobile launched 4G service with WiMax. Sprint is getting rid of WiMax and switching everything over to LTE. Virgin and Boost will eventually move over to LTE. They are in the middle of that technology transition," Henderek said. "So if they do launch this new service, I am assuming they will eventually go LTE. But would they launch LTE service from Day One or would they keep it as more of a differentiated offering? That's the question."

Why Choose Sprint?

So why choose Sprint over another prepaid offering? Although the prepaid market is beginning to see more high-end smartphones make their way into the lineup, there still isn't much 4G LTE in the prepaid space.

"Metro PCS has LTE, but its handset selection is a little more limited and the LTE speeds they are getting are not as fast as what AT&T and Verizon Wireless have. And of course AT&T and Verizon Wireless have focused more on 3G for their prepaid services," Henderek said.

"You could argue and say there's a lot more affordable prepaid stuff out there, but nothing that gives access to a near-national 4G LTE network. That's still something that people are waiting for."

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