With Apple's iPhone drawing new customers to the third-largest carrier, Sprint Nextel is committed to a key differentiator in the market: unlimited data.
The data-hungry iPhone, with nearly a half-million available apps, is likely a key reason AT&T Mobility and Verizon Wireless have phased out unlimited data plans for new customers in favor of metered plans. Sprint, which gained the iPhone with the introduction of the 4S last October, is the only iPhone carrier to offer so-called "all-you-can-eat" data.
Match Made in Heaven
And that's not likely to change any time soon. The company announced that it expects to keep unlimited data plans even if the next iPhone model is equipped for long-term evolution 4G high-speed data, as is widely expected.
"I'm not anticipating the unlimited plan would change by that point," Sprint CEO Dan Hesse told CNET. "That's our distinctive differentiator. Frankly, [the iPhone and unlimited plans are] a marriage made in heaven. We're clearly attracting customers from our competitors."
Sprint sold 1.5 million iPhones in the first quarter, the company reported this week, which is far less than the 4.3 million sold by AT&T and 3.2 million sold by Verizon Wireless; but 44 percent of Sprint's iPhone sales were to new customers. Overall the carrier added 1.1 million newcomers, for a net gain of 263,000.
Phones using LTE do not necessarily consume more data than 3G phones, but users are likely to download more and to download content such as HD video, which could eat away at data allowances.
"LTE phones encourage people to use more data because the network's high bandwidth and low latency delivers a better consumer experience," wireless expert Alex Spektor of Strategy Analytics told us Wednesday.
AT&T and Verizon customers who signed up for unlimited data plans before the change can still use them, but newer customers choose from plans starting from $15 for 200 megabytes to $125 for 12 gigabytes at AT&T, and $30 for two gigabytes to $100 for 12 gigabytes at Verizon.
Sprint's Simply Everything plan for the iPhone is $109 for unlimited voice on Sprint's network, unlimited text messaging and unlimited data, with six other plans available based on the amount of minutes. Sprint also charges a $10 premium data charge for smartphones, however.
As smartphone adoption rises and iPhone sales soar, unlimited data will continue to be a strong selling point for Sprint, Spektor said.
"Consumers are becoming increasingly smarter about the total cost of ownership of their devices," he said. "Because LTE devices are more cloud-centric, the ongoing cost to consumers will also be higher with limited plans. Operators who are able to remove cost barriers to LTE adoption and offer unlimited use of cloud-based content and services will attract consumers."
He cautioned, however, that more customers using more and more data on a carrier's 4G network can cut into revenues.
"In the long term, business models will need to evolve to control the cost to consumers while still driving profit growth for the operators," Spektor said.