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Sprint Lures AT&T’s IPad Users With Portable Hotspots

Sprint Lures AT&T’s IPad Customers
The Overdrive 4G router for Sprint Nextel Corp. Photographer: Ronda Churchill/Bloomberg

Sept. 28 (Bloomberg) -- When Apple Inc. began selling a version of its iPad tablet this year that could connect exclusively to AT&T Inc.’s third-generation wireless network, Sprint Nextel Corp. saw an opportunity.

Touting the unlimited data on its portable Wi-Fi devices -- AT&T stopped offering unlimited plans in June -- Sprint has been luring iPad owners to its network. Sprint’s palm-sized Overdrive 3G/4G hotspot device allows users to connect to the lower-priced Wi-Fi-only iPad from anywhere the carrier has coverage.

Portland, Oregon-resident Rob Morgan said he’s been using his Overdrive to connect his and his wife’s iPads without fear of exceeding data limits. “We can use the Overdrive without worrying, which is great,” Morgan, 66, said in an interview. “And we can use it while driving, it’s just very convenient.”

The portable Wi-Fi devices give Sprint, as well as Verizon Wireless, a chance to tap into a market otherwise closed to them through Apple’s exclusive contract with AT&T, which has connected 500,000 iPads to its network out of 3.3 million sold. Apple and AT&T have declined to say when their contract ends.

“IPads obviously are devices that are very popular; it’s in our best interest to market our products that work with those,” said Cristi Allen, a Sprint spokeswoman. She said Sprint’s efforts to attract iPad owners has been “a big success,” though she declined to give sales figures.

Tiered Pricing

In June, AT&T stopped offering $29.99 unlimited data plans on the iPad in favor of tiered pricing starting at $25 for 2 gigabytes of data per month, with additional gigabytes of data available for $10 each per month. The Overdrive offers unlimited data for $59.99 per month.

A user streaming an average of one 30-minute television show and 30 minutes of music per day would exceed their 2 gigabyte limit by month’s end, according to AT&T’s website. That doesn’t include any e-mails sent or received or additional Internet browsing.

Sprint Chief Executive Officer Dan Hesse has said the Overland Park, Kansas-based carrier has no plans to end unlimited data plans, while Verizon Wireless said it will introduce data caps in as soon as four months.

Brenda Raney, a Verizon Wireless spokeswoman, said the carrier’s $59.99-per-month MiFi can also connect iPad users to its network though the Basking Ridge, New Jersey-based company hasn’t promoted that feature. “Once customers leave the store, they can do anything they want with it,” she said.

‘Pretty Cool’

Fletcher Cook, an AT&T spokesman, and Natalie Kerris, an Apple spokeswoman, declined to comment.

Morgan said he’s found the Overdrive to deliver 3G speeds where other carriers don’t reach, such as on 11,300-foot Mount Hood in Oregon. “I was able to check my e-mail all the way up there, pretty cool,” said Morgan, who runs Barefeats.com, an Apple enthusiast website.

The Overdrive costs $99 and the MiFi can be free, after rebates, according the companies’ websites. That compares with a $130 premium for iPads that can connect directly to AT&T’s network.

In April, Sprint offered through Best Buy Co. a free iPad case featuring an Overdrive-sized pocket to customers who coupled the Wi-Fi hotspot with the tablet, said Allen. “We completely sold out,” she said.

Sprint rose 1 cent to $4.60 at 4 p.m. in New York Stock Exchange composite trading. AT&T, based in Dallas, rose 5 cents to $28.92. Cupertino, California-based Apple fell $4.30, or 1.5 percent, to $286.86.

To contact the reporter on this story: Greg Bensinger in New York at gbensinger1@bloomberg.net

To contact the editor responsible for this story: Peter Elstrom at pelstrom@bloomberg.net

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