During the first few months of the year, MetroPCS and Cricket were all the buzz in the wireless industry. They offered flat-rate, unlimited calling plans on a prepaid basis, which was unheard of before these two came to town. Where before the prepaid market was a mere afterthought, now it was gaining some serious public attention. However, it seems they caught some of that attention a bit too late. As you may be aware, subprime lending — that is, offering variable-rate mortgages to those unqualified for fixed rate ones — took a huge hit beginning in June. The market has stumbled since, and with it have gone Metro and Cricket. Even though we try to debunk the myth that prepaid is only for those with poor credit, the fact remains that people with poor credit do use prepaid. These same people were certainly candidates to receive subprime loans. And when that market crashed, those who had their houses foreclosed on had bigger things to worry about than their cell phone. This resulted in a mess for the companies in the second quarter, with both Metro and Leap (Cricket’s parent company) posting lower than expected customer acquisitions and higher than expected customer turnover. Makes sense to us. Worsening the landscape for these two, Sprint has begun rolling out Boost Unlimited through their subsidiary, Boost Mobile. They signed up over 100,000 subscribers to the service in the second quarter. This affects Metro more than Leap, since Metro operates in Texas, which is one of two areas where Boost Unlimited is available. The other is Los Angeles, where neither of the companies owns a network — though Metro plans to open one in the near future. We have a new forecast. Many analysts saw the merger of Metro and Leap as a perfect marriage. They were essentially the same service, but covered different regions of the country. However, with their stocks down and Sprint working feverishly to build up, we can see Sprint adding them to their already large network. That would mean the assimilation of both companies into Boost. The moral of the story: fret not, prepaid users. You’ll always be able to find unlimited flat-rate calling somewhere. [RCR Wireless News]]]>
