The Wall Street Journal is reporting today and citing its own sources that Sprint will move the iPhone to its Prepaid Group as soon as next month with a planned launch on Virgin Mobile. A previous rumor stated that the iPhone would be available in September on companion brand Boost Mobile, but many elements of the rumor didn’t correlate with current activity.
With Cricket announcing its first iPhone 4S and iPhone 4 as the first prepaid iPhone on the US market since the demise of AT&T’s GoPhone offerings, carriers are no doubt scrambling to find ways to recover their initial device agreement expenditure with Apple as soon as possible. While the iPhone is popular enough to change carrier perceptions, it comes at the cost of increased network strain and support costs compared to other platforms and phones.
Sprint stands to benefit the most from such an arrangement, should the launch timeline pan out, as the prepaid provider is currently realigning its device lineup to include higher-end devices such as the HTC One V later this Summer and has recently launched WiMax access with the rebranded EVO 3D in the EVO V. Out of all of the carriers that currently offer the iPhone Sprint is also the one under the most pressure from an earnings standpoint, as its $15 billion purchase deal with Apple means that Dan Hesse needs to find ways of moving those units other than relying solely on more profitable postpaid customers and looks to do so with the reported move to Virgin Mobile.
What remains to be seen is how the device will be priced in comparison to Cricket’s iPhone offering, as that carrier also has an MVNO carriage agreement with Sprint that ironically precludes it from offering the iPhone in the areas that that are powered by Sprint’s network rather than its own native footprint, as it currently relies on a combination of legacy dual-band CDMA and the newer, but incompatible CDMA AWS overlay. Because of this, sales of the Cricket iPhone are limited to locations with native legacy Cricket CDMA coverage, while the markets with expanded CDMA coverage via AWS and new Sprint roaming markets are being left out.
At $399 and $499 for each respective model on Cricket, its unclear whether Virgin would be allowed to practice its current smartphone subsidy behavior for smartphones with the iPhone, as Virgin Mobile typically releases smartphones with lower than average costs for the first month before reverting to its own suggested retail price soon after in order to drive initial sales. Should Virgin Mobile be able to duplicate that pattern, the early iPhone prepaid race would end in Virgin Mobile’s favor due to its superior retail presence and more consistent coverage compared to Cricket.