Can Virgin Mobile really offer free phone service?
The pre-paid cellular arena in America isn’t watched nearly as closely as the battles between the big 4, but considering the big 4 collectively own a majority of those pre-paid brands, they’re still pretty important. That’s why our ears perked up when we heard Virgin may be set to test one of the most peculiar strategies yet in the field.
In a recent investors’ conference call, Sprint CEO Marcelo Claure revealed that they were testing a new business model for Virgin, one that would look to ditch device subsidies to instead position as the customer getting free wireless service. Here’s how he explained it:
“I envision Virgin as being our disruptive brand,” Claure continued. “You’re going to see us test different models. One model we’re testing that we like is a potential—rather than subsidizing handsets, actually providing free airtime with no subsidy on the handset. So you’re going to see Virgin be our disrupter brand. And you’re going to see Boost be a very strong brand that can give good competition to both Cricket and Metro.”
At first take, it sounds mind-blowing: free wireless service? In a field where these companies are known to be greedy beyond belief? SIGN. ME. UP.
But Claure left a lot up to interpretation here. He was intentionally vague in a one-liner that could be misconstrued a number of ways. His line about ditching the subsidies sounds interesting because subsidies can exist even in the pre-paid world, however we’re not sure how much extra a lack of subsidy can actually offer for Virgin to make such a big move. These impressive smartphones can already be bought for as little as $100 fully unlocked and without carrier influence to make it so.
Our only guess is that Virgin could go with some sort of aggressive marketing tactic which uses on-device ads to make up for their lack of need to charge for service. A more realistic take on that idea would be for customers to be able to earn free airtime in some capacity, while still having to pay for baseline service, something that would come off as little more than an interesting quirk and perk for a traditional business model to anyone capable of reading between lines.
All of that is to say, we don’t think it’s possible for any business to be strong enough to offer any services completely free, so when you see the headlines this week talking about forthcoming “free” service from Virgin Mobile, remember the points above, and look forward to reading the fine print when or if they ever launch it on a national scale.
[via Fierce Wireless]