second straight customer service survey, which means they’re improving on their biggest weakness. They’re also offering more incentives to MVNO Virgin Mobile. They’ll pay out a bonus for customers added in the fourth quarter of 2008. The MVNO model is a strange one. First, Virgin pays Sprint for network usage. This will total $320 million this year, $370 million next year, and $420 million in 2010. But Virgin can earn back some of that money with network credits. Sprint agreed to pay the MVNO $2.50 for each subscriber they added between July 1, 2008 and December 31, 2009. That total could reach a maximum of $10 million. That deal was amended this week, with Sprint paying an additional $2 for each customer added in the fourth quarter. It appears that the $10 million cap could be lifted, too. The required payment for 2008 will also drop to $318 million. Sprint Connection makes a rough calculation of the value of a Virgin customer to Sprint:
This is a rough calculation, to be sure, but it takes about 11 Virgin customers to equal one of Sprint’s calling contract subscribers paying, on average, $56 a month. If Virgin pays Sprint $318 million and has about 5 million subscribers, that translates to about $5 per month per Virgin customer for Sprint – before Sprint pays any “network usage credit” bounties for new customers.]]>