WSJ article on LWIN flat rate plan.
March 17, 1999
Leap Wireless Plans Flat Rate
For Cellular-Phone Customers
By NICOLE HARRIS and STEPHANIE N. MEHTA
Staff Reporters of THE WALL STREET JOURNAL
Leap Wireless International Inc. plans to offer a flat-rate "all-you-can-talk"
billing option to some of its cellular-phone customers.
Analysts called the strategy a bold move to persuade consumers to choose cell
phones over traditional telephones. Leap, which last year was spun off from
Qualcomm Inc., is a tiny player in the cellular industry, with about 20,500
subscribers. The San Diego company has agreements to acquire wireless
licenses in Tennessee and the Carolinas, as well as in several foreign countries.
The new service will enable customers to make unlimited local calls for $29.95
a month. The service, to be marketed under the brand name Cricket
Communications, targets the majority of cell-phone users, who only use their
phones in their local calling area.
Leap isn't the first U.S. wireless carrier to offer unlimited local calling.
Powertel Inc., a small carrier based in West Point, Ga., a few years ago ran a
$50-a-month, unlimited local calling promotion to attract new users. The plan,
however, was never intended to be permanent.
It seems unlikely that big, national carriers such as AT&T Corp. and Sprint
PCS Group will respond with all-you-can-talk local plans. The carriers already
offer national flat-rate pricing plans that give customers a "bundle" of minutes,
good for local or long-distance calls. These plans are aimed at frequent
travelers.
Still, an unlimited local calling plan may appeal to wireless users who never
"roam" out of their home territory and don't make many long-distance calls.
"That plan is pretty compelling," said Steven Yanis, a wireless analyst with
NationsBanc Montgomery Securities. "It will be a stone in AT&T's shoe."
Leap will launch its plan Wednesday in Chattanooga, Tenn., and says it will roll
out the service in other small to midsize markets such as Knoxville, Tenn., in
coming months.
The simplified billing option is an attempt to attract users who want to take the
guesswork out of their monthly bills. Typical calling plans lock customers into
a set amount of minutes for a monthly fee. If customers go over their
allocation, they pay extra. Prepaid options that allow customers to plunk down
a monthly fee in advance limit the amount of available airtime. "We want people
to think of their wireless phones as a basic telephony service," said Harvey
White, Leap's chief executive.
Matthew Hoffman, an analyst at Dataquest Inc. in San Jose, Calif., said the
pricing may be enough to persuade consumers to cut the cord to their landline
telephones. Dataquest research shows that 30% of consumers are willing to
switch to wireless from their landline phones if the costs are about $30 a
month.
The fledgling company will have to ensure that it can handle the additional
traffic. During a trial, Leap learned that customers talked more often and
longer on their cell phones than they did on landline phones. Mr. White said
Leap will have adequate capacity.
Copyright © 1999 Dow Jones & Company, Inc. All Rights Reserved. |
