Phone Tag - Page 2 of 5

Phone Tag

With more than 4 million customers, Boost now reigns as the undisputed leader in the prepay category. In achieving this milestone, Carter continues to demonstrate why he is one of Sprint’s most powerful strategic weapons in the telecom industry.

Fighting Stigmas and Stiff Competition
Sprint Nextel is currently the third largest wireless provider with 49.1 million total subscribers and generates 83% of their business in that category. It trails only AT&T and Verizon——the other two major players——in subscribers. Although wireless capabilities have grown as an intrinsic part of social and professional life, the big three had to deal with quite a bit of static in the estimated $164.6 billion industry this year. William Power, senior industry analyst and CFA for Richard W. Baird & Co., predicts Sprint’s revenues will decline 7.8% in 2009. “Growth is clearly decelerating,” explains Power. “And I think the biggest driver is that we are at roughly 90% penetration in this country. While there are more and more people carrying multiple devices, it has become more difficult [to grow at the rate] this industry has in the past.”

The prepaid segment however, presented an opportunity for Boost. To make inroads in this sector, Carter first compiled data, concentrating on the needs——and frustrations——of wireless consumers. The prepay model’s greatest advantage: No contracts. Since such agreements didn’t require credit checks, however, there was a negative perception that prepay customers couldn’t qualify for contracted services. Carter says, “To overcome that you have to create a value proposition [for consumers] across all socioeconomic lines to consider that this is a smarter choice.” He also focused on status and functionality by upgrading handset selections.

Other factors included building trust with consumers and developing an affordable pricing strategy. “If you were to ask most people to rank the quality of their experience with [the telecom] industry, it ranks right up there among the worst,” he explains. “They find it riddled with deception. Your wireless bill is the one bill you open with trepidation each month. You never know what it’s going to be. You thought you were paying $49.99 and it ends up being $60. But our plan is 50 bucks. It’s not $50 dollars plus all these other fees, so that became a differentiation for us. It gave us an opportunity to say, let’s change the paradigm. So we gave you a predictable price point.”

Boost also went a step further by extending national coverage while its biggest competitors offered local service. “The two companies that have pioneered this space in a lot of respects were Metro PCS and Leap Wireless,” explains Power. “Both of those companies have enjoyed very good subscriber growth over the past several years. Boost re-entered the space at the beginning of this year with its Boost Unlimited product and I think what has resonated is that it is a nice value proposition, particularly in tough economic times.”

Associating the brand with value helped diminish negative impressions of prepaid products. “Today people actually feel that this is a smart choice as opposed to a default choice,” maintains Carter.