This Mobile Carrier Is Sticking to Its Plan


Last month, MetroPCS (NYS: PCS) chairman and CEO Roger Linquist said the LTE handsets that currently sell for between $250 and $450 are just too expensive for his customers. Since the company provides only month-to-month wireless service, it can't subsidize the cost of cell phones the way AT&T (NYS: T) and Verizon (NYS: VZ) do for their long-term contract subscribers.

In an interview then with FierceWireless' Sue Marek, Linquist said Metro's "sweet spot" for LTE handsets is "$100 to $150."

In Tuesday's third-quarter earnings call, Lindquist said those cheap 4G Android smartphones would become available in the second half of 2012. The company will need those phones sooner than later. Metro, in trying to get as many customers as possible onto its LTE network, has been giving $100 rebates for two of the three LTE phones it currently uses, a practice it can't keep up for long.

"With our limited subsidy model, affordability of smartphones is key for our subscribers," Linquist said.

Metro's COO, Tom Keys, said in the earnings call that the company is working with "four and five handset vendors" to produce the phones. Metro's present LTE phones come from Samsung, and it wants to add LTE phones from Huawei Technologies and ZTE, among other vendors.

MetroPCS is counting on two things. First, it needs the popularity of its current no-contract model to continue growing. The prepaid market share is at 23% today, and Keys says that figure is forecasted to reach 30% by 2018.

Second, MetroPCS needs those inexpensive LTE handsets to appear in time so the company can use the "10 million users" capacity that Linquist says will be available when the network upgrades are completed by the end of this year.

I think MetroPCS is doing a smart thing by sticking to its guns as a prepaid carrier. It knows its market well and is sticking with its model. Let me know what you think of this strategy in the comments section below.

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At the time thisarticle was published Fool contributorDan Radovskyowns shares of AT&T. Try any of our Foolish newsletter servicesfree for 30 days. We Fools don't all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.

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