Sprint Nextel Corp. (S) will offer Apple Inc. (AAPL)’s iPhone next month with unlimited data service plans to distinguish itself from rivals AT&T Inc. (T) and Verizon Wireless, according to people familiar with the matter.
Sprint, the third-largest U.S. wireless carrier, plans to begin selling the device in mid-October under a deal with Apple for the next model, the iPhone 5, said the people, who wouldn’t be identified because the plans aren’t public. Becoming the country’s only operator to offer the device with unlimited data service for a flat fee may help Sprint draw customers from AT&T and Verizon Wireless, which already carry the phone, they said.
Sprint, based in Overland Park, Kansas, is struggling to compete against larger rivals and has lost money for 15 consecutive quarters. The addition of the iPhone to Sprint’s lineup will help it win customers, said Matthew Thornton, an analyst at Avian Securities LLC.
“It’s a competitive disadvantage if your two larger competitors have the iPhone and you don’t,” Thornton said in an interview. “Getting the iPhone closes that gap.”
Michelle Leff Mermelstein, a spokeswoman for Sprint, said the company doesn’t comment on products or services it hasn’t announced. Natalie Harrison, a spokeswoman for Apple, declined to comment on rumors or speculation.
Sprint already offers unlimited data plans for smartphones such as Research In Motion Ltd. (RIMM)’s BlackBerry and HTC Corp. (2498)’s Evo, which runs on Google Inc. (GOOG)’s Android operating system. Sprint’s unlimited voice and data service costs $99.99 a month.
AT&T and Verizon
AT&T and Verizon charge for data service on top of voice- service plans. AT&T, which has unlimited voice service for $69.99 a month, offers 200 megabytes of data for $15 a month, 2 gigabytes of data for $25 a month, or 4 gigabytes of data for $45 a month. Verizon’s data plans for the iPhone start at $30 a month for 2 gigabytes and rise to $80 for 10 gigabytes, in addition to unlimited voice service for $69.99 a month.
Unlimited data plans are a draw because they allow customers to surf the Web, share photos or watch videos as much as they want. They’re particularly valuable for people who use mobile devices for applications such as Netflix Inc. (NFLX)’s movie service or Pandora Media Inc.’s streaming music.
“The advantage of unlimited is, it’s cheaper for the big users,” Peter Rhamey, an analyst at Bank of Montreal, said in an interview. The plans may draw other customers because “people don’t like bill shock,” he said. “Consumers will pay a premium for unlimited.”
IPhone vs. Android
The iPhone may not lead to more data use per customer than Sprint already sees from customers who have Android phones. In the first quarter, Android smartphone owners in the U.S. consumed an average of 582 megabytes of data each month, compared with 492 megabytes for iPhone owners, according to Nielsen Co.’s analysis of nearly 65,000 cell-phone bills.
Apple’s iPhone has proved to be a valuable recruitment tool for rivals: Of the 5.6 million smartphones AT&T sold in the second quarter, the device accounted for 3.6 million. A quarter of the subscribers who bought the iPhone were new to AT&T, the company said.
Sprint has been using the iPhone’s launch as retention tool with its executives, as it expects the addition of the device to boost its stock price, said one person familiar with the situation.
Sprint was unchanged at $3.45 at 4 p.m. on the New York Stock Exchange, and has declined 18 percent this year. Apple dropped $6.66, or 1.7 percent, to $377.48 in Nasdaq Stock Market trading and has climbed 17 percent this year.
To prepare for the introduction, Sprint has postponed the September debut of a rival smartphone that uses fourth- generation, or 4G, wireless technology, said one person familiar with the situation.
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