Virgin Mobile tweaks big telecoms with $79 unlimited call plan

With soaring gasoline, food and other expenses, weary consumers are looking for some deals. But how easily will they take the bait as wireless providers shuffle the price deck on calling plans?

After all, Virgin Mobile USA on Tuesday said it would introduced a new $79.99 unlimited nationwide calling plan on July 1. No credit card is required. No activiation fees or annual contracts are needed.

The Warren, N.J.,-based service provider, which attracts mostly young consumers, has joined the flat-rate bandwagon that started earlier this year with $99 unlimited call deals by AT&T, Verizon Wireless, Sprint, T-Mobile and U.S. Cellular.

"Virgin Mobile priced its unlimited plan below the majors to attract customers. That makes sense," said Jeff Kagan, an independent telecommunications analyst. "The only question is how many of their young customer base will qualify for this unlimited plan. $79 is attractive, but their average customer spends less that that now."

This $79.99 unlimited plan is strategically important for Virgin Mobile, which had been growing well over the last several years. But that growth has weakened in recent months as other carriers start focusing more on the Virgin Mobile-type of customer, the youth market.

"I don't think it will matter to more than a small percentage of Virgin Mobile customers at this time," Kagan said of the new plan.

But a call is a call, and consumers are likely to seek the best deal, whether it's pre-paid or monthly plans or long-term contract.

"Lowering the prices and having no contract is really a brilliant idea," said Stacey Cook, senior manager of wireless research for iSupply Corp., which analyzes the telecommunication industry.

Virgin Mobile is aggressively wooing away those anchored to contracts, she said.

"Even the bigger carriers are now trying to play in this realm and provide different flex plans," Cook said.

The Virgin Mobile plan likely could spark a price war among similar service providers who focus on pre-paid offerings. It also could force the bigger carriers, like AT&T and Verizon to re-evaluate their monthly plans or even the length of their longer-term contracts, Cook said.

Virgin Mobile ordinarily competes directly against other pre-paid service providers, such as Cricket Communications or MetroPCS Wireless Inc. in many other markets, but not in Chicago.

"A study showed (last May) that about one-third of wireless customers 18 and older are interested in unliminted plans," said Virgin Mobile spokeswoman Corinne Nosal.

Last April, Virgin Mobile revamped its monthly plans, starting at $24.99, and 38 percent of its customers quickly jumped on them, Nosal said.

Virgin Mobile has about 5 million customers nationwide and operates on the Sprint network in Chicago.

Sprint, which is a shareholder in Virgin Mobile, has tweaked its own plans to compete. On June 15, Sprint began offering new simplified packages on a monthly basis. It has everything-type plans that range from $69.99 to $99.99 that include unlimited calls. The differences include the amount of text messaging and other features.

AT&T offers the prepaid GoPhone to compete with Virgin Mobile and also goes after the unimited calling customer with its $99.99 plan that debuted in earlier this year, said ATT spokeswoman Meghan Roskopf.

Besides the $99 call deal, Verizon has a pre-paid plan that allows customers to pay only on the days they use their phone and charges 99 cents each day it's used. It also offers unlimited in-network calling, said Verizon spokeswoman Carolyn Schamberger.

Lowering the prices on any type of package will definitely produce pressure on other phone companies to lower their prices, said Greg Brewster, associate professor of telecommunications at DePaul University.

"People prefer a flat rate because they just don't want to keep track of the minutes anymore," Brewster said. "And they just want to do it as cheaply as possible. So whether it's Skype (Voiceover Internet Protocol) or another technology, no one cares how it's delivered, as long as it's cheap."