Sprint Nextel Buying Virgin Mobile Prepaid Service
The world of prepaid wireless-phone services is getting a little smaller: Sprint Nextel announced this morning that it would buy Virgin Mobile USA for $483 million in stock.
My colleague Cecilia Kang notes in her story that prepaid service -- in which users sign no contract up front and either pay for a bucket of minutes that they can use up over time, or pay month-by-month for a plan with a set allotment of minutes -- has done well for Sprint as it recovers from the aftermath of its 2005 merger with Reston-based Nextel. (Funny how these high-profile tech mergers never quite seem to work out.)
But how will Sprint sell these two apparently overlapping services? Both offer comparable pay-as-you-go options (Boost, Virgin) starting at 10 cents a minute; both (Boost, Virgin) also sell unlimited talk/text/Web plans for $50 a month. Both also employ the kind of edgy, Gen-Y marketing pitches that can make a Gen X-er such as myself feel a little old.
The key differences between them, as PC Magazine's Sascha Segan explains in his take on the purchase, lie in the technology each service runs on. Virgin uses Sprint's regular CDMA network; Boost employs the older Nextel iDEN network, which provides walkie-talkie push-to-talk communication but only permits a slow Web connection. As one result, Virgin Mobile tends to offer a more interesting selection of phones.
Considering that iDEN doesn't have much of a future in general -- no other major U.S. carrier uses it, and it has no realistic upgrade path -- it would be no surprise to see Virgin Mobile and Boost eventually merge into one CDMA-based service. And this deal can only smooth the path for something like that.
As it happens, I've been planning to take a look at unlimited prepaid services -- locally, Cricket Communications provides another set of all-you-can-talk options -- so this news comes at an interesting time. In other words, I'm glad this didn't break the week after I'd run that story... now I'll just need to wait a bit to see what details emerge about Sprint's intentions.
In the meantime: Do you use a prepaid wireless service from Boost, Virgin or another firm? What led you to choose it? How has that worked out for you?
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