--MetroPCS will launch unlimited 4G wireless plan Thursday
--Company cautious about commitment risks of iPhone for
carriers
--Chief operating officer sees consolidation as inevitable
(Adds more comments from interview with MetroPCS's chief
operating officer.)
By Thomas Gryta
MetroPCS Communications Inc. (PCS) will launch a new wireless
plan this week to provide unlimited data on its next-generation
network, as the carrier aims to keep up with larger players in the
competitive smartphone environment.
The Dallas-based, pay-as-you-go carrier made a bet four years
ago to upgrade its network using fourth-generation LTE technology
and is pushing customers to use the more efficient system. Part of
that strategy will include offering higher-profile devices to
customers, but the company is cautious to make the costly and risky
commitment to get Apple Inc.'s (AAPL) popular iPhone.
Meanwhile, MetroPCS is in the market for access to more
airwaves, like many wireless carriers, as data usage is expected to
continue growing. In an interview, Chief Operating Officer Thomas
Keys said the industry faces inevitable consolidation, although he
doesn't see a combination with rival Leap Wireless Communications
Inc. (LEAP) as sensible.
While the MetroPCS lost customers in the second quarter--ending
June with about 9.3 million subscribers--Mr. Keys is confident of
future growth. The overall market is saturated, but he believes
that prepaid companies can benefit from contract customers
switching to prepaid. In the markets that MetroPCS operates, there
are 4 million to 5 million people with expiring contracts every
month, and it is even higher in the fourth quarter, he said.
In an effort to capitalize on that turnover, MetroPCS will offer
unlimited talk, text and data on its fourth-generation LTE network
for $55 a month starting Thursday, under a promotional offer that
could last three to six months, Mr. Keys said. The no-contract plan
is branded "LTE for All."
When the promotion ends, the price goes up to $70 a month, its
current price for unlimited data, Mr. Keys said.
In comparison, basic wireless plans for smartphones operating on
LTE networks from rivals start around $70 but frequently cost more
than that and can include restrictions on either voice or data
usage.
MetroPCS will offer the popular Samsung Galaxy S III on its
network, although Mr. Keys wouldn't give an expected launch date.
The company is currently testing the phone, he said.
While the next generation iPhone is expected to use LTE
technology, Mr. Keys expressed caution about bringing such a device
to the MetroPCS network because of the purchase commitments that
Apple often demands of carriers. Rival Leap Wireless struck a
three-year deal with Apple to spend $900 million on iPhone volume
purchases.
"I don't want to cut off my nose to spite my face," Mr. Keys
said of carrying the iPhone. While he would like to offer the
device, he worries that having to push the iPhone would damage
long-term relationships with other phone manufacturers. He declined
to comment on any talks with Apple.
Although the Galaxy S III has a similar price point to the
iPhone, it doesn't have the purchase commitment. He estimates that
only 2% or so of MetroPCS users would be interested in such a
high-end phone, equating it to a "Cadillac in the showroom."
Wireless carriers subsidize smartphones by hundreds of dollars
for customers who sign a two-year contract, and charge higher
monthly prices. Prepaid plans generally have a lower monthly bill
but require a much higher upfront payment for the phone.
MetroPCS operates in 17 markets with a network that covers about
104 million people, Mr. Keys said. Its LTE network is rolled out on
97% of its cell sites. All the major U.S. carriers are upgrading
their networks to LTE.
MetroPCS and Leap are often the subject of deal speculation
because they operate in complementary regions with similar business
models. MetroPCS attempted to buy Leap in 2007, and the companies
have reportedly talked since then about a deal, but Mr. Keys
downplayed any combination.
"If two companies that both need spectrum come together, I don't
know that we have made our problem any better," he said.
Earlier this month, Leap said it is evaluating "all options,"
including cost cuts and potential asset sales, as it attempts to
turn around its business.
Mr. Keys acknowledged that consolidation is likely inevitable
because there is a limited amount of wireless airwaves to spread
around, and most companies need more access. MetroPCS executives
regularly discuss spectrum and how the company can acquire more, he
said, but their need depends on the specific market.
Mr. Keys notes that struggling Clearwire Corp. (CLWR) is
"sitting on a whole lot of spectrum," but it may require different
technology than MetroPCS's current network. He said bankrupt
Lightsquared Inc. is hard to assess because there are questions
about the usability of its spectrum holdings.
The company might be interested in buying spectrum that Verizon
Wireless is planning to sell, but Mr. Keys said those assets may
not work for MetroPCS because it doesn't have any of its network
deployed at the relevant bandwidth to make such a purchase
worthwhile.
Verizon Wireless is a joint venture of Verizon Communications
Inc. (VZ) and Vodafone Group PLC (VOD VOD.LN).
-Anton Troianovski and Spencer Ante contributed to this
article.
Write to Thomas Gryta at thomas.gryta@dowjones.com
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