Starting next week Sprint Nextel Corp's Virgin unit will sell a new cellphone service plan to cater for the increasing number of young people who prefer to use their phone for text messaging rather than talking.
While most U.S. cellphone plans center around voice services and include data as an extra and often pricey frill, Sprint's Beyond Talk offer promises unlimited texting and Web surfing for $25 a month but limits phone calls to 300 minutes a month.
The plan, which kicks off May 12, is a part of a new Sprint strategy to hone in on narrow segments within the fiercely competitive prepaid cell market where customers pay for calls in advance without having to commit to long-term contracts.
Dan Schulman, the head of Sprint's prepaid business, said the new offer is the first to target 18-24 year-old budget conscious cellphone users who are texting more and more and making as few phone calls as possible.
(For these people) voice is a technology of last resort. It's not the way they want to communicate, said Schulman who was Chief Executive of Sprint wholesale customer Virgin Mobile USA before Sprint bought the business late last year.
Sprint will also sell a $40 plan with 1,200 call minutes for people who still like to talk but want unlimited texts and mobile use of social Web services like Twitter and Facebook. A $60 plan includes unlimited calls and smartphones.
Roger Entner, a cellphone expert at market research group Nielsen, said the $25 plan would likely appeal to teenagers who cannot or do not want to be on a family plan which is typically controlled by a parent.
The new Virgin plan is really a strong play for the texting youth segment, Entner said, estimating that the addressable market for U.S. texters who avoid making phone calls is about 50 million people.
Sprint's rivals in prepaid include Leap Wireless, MetroPCS Communications and Tracfone, a unit of America Movil.
Sprint's Boost unit shook up the prepaid market last year with a $50 per month unlimited voice and data plan that helped it steal customers from rivals and forced their prices down.
Entner said the new text-centric plan could put pressure on other prepaid operators to follow suit.
Who you'll hurt is the guys who will not respond to it and want to sell to the teens and twenties segment, Entner said.
(Reporting by Sinead Carew; Editing by Dhara Ranasinghe)