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8/25/2010
05:07 PM
Eric Zeman
Eric Zeman
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Prepaid Wireless Broadband: Sprint $40, Verizon $80

Sprint and Verizon Wireless have both recently rolled out new prepaid wireless broadband options. Sprint's plan costs half as much as Verizon's. Why?

Verizon Wireless has some serious gumption to charge $80 per month for 5GB of broadband data. Sprint, through its Virgin Mobile USA brand, is charging just $40 per month for prepaid wireless broadband. What the heck is going on here?

Let's take a look at how all the plans break down. Starting in early August, Verizon Wireless refreshed some of its wireless broadband options. For the post-paid, contract-signing crowd, the $60/month for 5GB and $40/month for 250MB remain intact. The $60 price point for 5GB of data has been in place for years. All the major wireless operators offer broadband at this price point.

Verizon's prepaid options look like this:

  • $80 buys 5GB of data every 30 days.
  • $50 buys 1GB of data every 30 days.
  • $30 buys 300MB of data every 7 days.
  • $15 buys 100MB of data every 24 hours.

Sprint's prepaid options through Virgin Mobile USA's Broadband2Go look like this:

  • $40 buys unlimited data every 30 days.
  • $10 buys 100MB of data every 10 days.

Both offer wireless broadband via CDMA-EVDO Rev. A networks through nearly identical hardware, such as the Novatel MiFi 2200 mobile hotspot. Why such a huge difference in the price?

First, Sprint is working harder to pitch itself as a better value than its competitors. With four prepaid brands (Virgin Mobile, Boost Mobile, Assurance Wireless and Common Cents Mobile) at its disposal, it has the leeway to test aggressive pricing models. There's no doubt that $40 for unlimited EVDO Rev. A broadband is aggressive.

Sprint also has to leave some room to test out pricing models for its 4G WiMax network. Sprint is charging a little bit of a premium for wireless broadband via WiMax, as well it should. It has spent billions to erect the 4G wireless network.

Beyond that, Sprint has long bundled its calling, texting, and data plans together for post-paid customers in packages that are cheaper than what's offered by the competition. I would expect Sprint's offering to come in at a lower price point than its competitors.

Another thing to consider is that prepaid services are typically offered without contracts and without background checks. That means the company involved is taking a little bit more of a risk that the customer will bail. Despite the increased risk, it's the nature of the prepaid business.

I sincerely doubt Verizon Wireless will lower its pricing to match Sprint's, but perhaps that's the whole point. Verizon Wireless might rather sign up post-paid customers to its $60 monthly plan for two years, rather than take the risk that a customer will only stick around for three or four months, even at $80 per month.

In other words, the $80 monthly prepaid wireless broadband fee is probably just bait for the $60 post-paid plan.

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