Virgin Mobile Hopes to Attract New Broadband Customers with One Month Free Service Promotion

| Nov 9, 2011 | Consumer Services U.S.
| Analyst: Deepa Karthikeyan

Event Summary

November 11, 2011 - During its data collection activity, Current Analysis has noted that new customers who purchase and activate a Virgin Mobile Broadband2Go device (MiFi or USB device), are eligible to receive one free month of the $20/500MB plan or 500MB (whichever comes first). Customers have until November 15, 2011 to purchase a MiFi or USB device, and until December 12, 2011 to activate service to be eligible for the promotion. The ZTE Peel is not eligible for the promotional offer. The promotion only applies to new users.

Quick Take

Analytical Summary

• Current Perspective: Negative on Virgin Mobile’s new promotional offer, because while it may attract attention from those who may have considered the carrier’s offerings in the past, it will do little to enhance the overall appeal of its broadband portfolio, which compares unfavorably to offerings from Tier 1 carriers. Moreover, the promotion is only limited to new users, which might anger existing subscribers. To top this, Virgin Mobile continues to price its aged devices high (the Ovation MC760 USB device costs $79.99 and the MiFi 2200 hotspot costs $149.99) and its native Sprint 3G footprint with no roaming might hold back some users.

• Vendor Importance: Moderate to Virgin Mobile, because while the promotion will attract the attention of a few potential broadband subscribers, it is unlikely to keep their interest without a change in plan structure/pricing, the fact that the promotion is valid only to new users and not on the Peel device will help keep any potential revenue loss to a minimum.

• Market Impact: Low on the wireless services segment, because Virgin Mobile’s promotion is unlikely to elicit a reaction from rival carriers. Virgin Mobile lost its position as one of the leading prepaid mobile broadband providers when it started restricting its $50 mobile broadband users to only 2.5 GB of data access before slowing data speeds. As a comparison, leading Tier 1 carriers offer up to 5 GB of data access to their postpaid mobile broadband users at the same price point, whereas T-Mobile offers its prepaid users up to 3 GB of data access before throttling speeds. Since the promotion doesn’t address the plan cost and holes in its broadband device portfolio (such as the lack of variety and tablet devices), it is unlikely to create an impact in the market.

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