By Sinead Carew
NEW YORK Jan 7 Sprint Corp on Tuesday
unveiled a new option called "framily" plans that give up to 10
family members or friends big service discounts if they sign up
as a group, the latest move in an increasingly competitive
The new option, which could represent a service discount of
almost 50 percent from Sprint's existing family plan in some
cases, follows aggressive discounts by Sprint's smaller rival
T-Mobile US that sparked a new wave of competition.
T-Mobile's chief executive officer put the spotlight on
family plans last week when he said winning over rivals' family
plan users was a New Year's resolution. T-Mobile is seen as an
acquisition target by Sprint, which is 80 percent-owned by
Operators have long offered discounts through family plans
because they help to retain customers as it is harder for groups
to switch than for individual customers. Sprint is taking the
concept a step further by letting friends and neighbors join
"framily" plans and providing them with separate bills.
Sprint CEO Dan Hesse said during a webcast of an investor
conference on the sidelines of the Consumer Electronics Show in
Las Vegas that, while the new plans would hurt average monthly
revenue per user, they would ultimately help Sprint's financials
by decreasing customer defections.
Because the plan requires each customer to pay for his own
cellphone, whether with a one-time payment or on an installment
plan, Sprint would also save money on phone subsidies, Hesse
The Sprint plan could cost as little as $25 per person for a
group of seven people with 1 gigabyte of data each, compared
with a $55 monthly bill for a single customer with the same
In comparison, Sprint charges more than $48 per person for
its more traditional family plans with seven lines.
POTENTIAL FOR FRICTION
However, if somebody decides to leave the plan, it would
increase payments for the remaining members. For example, for
each person who leaves a "framily" plan, the monthly bill could
go up by $5 for each member who stays in the group.
So while the new offer looks like a clever new way to tie in
customers, the creation of a dependence on non-family members
for discounts could cause all sorts of friction when people
leave the plan, said Recon Analytics analyst Roger Entner.
"I don't think there are that many people ready to throw in
their lot with their friends," Entner said.
He noted that college students may be most likely to make
use of such plans.
"If college kids are doing this, there'll be a lot of broken
friendships," Entner said. "This could be a source of endless
drama worthy of a soap opera, when the framily plan turns into a
While traditional family plans typically address households
with three or more people, Hesse told investors at the
conference that 60 percent of households have just one or two
people, leaving an opening in the market for the new plan.
At the same conference, Lowell McAdam, the chief executive
officer of Verizon Communications, suggested that
regulators may not look too kindly on a merger between Sprint
and T-Mobile because of the recent increase in competition.
Verizon is the majority owner of Sprint's biggest rival,
Verizon Wireless, which is 45 percent owned by Vodafone Group
Hesse declined to comment on any plans for consolidation by
Sprint during his appearance. T-Mobile US is 67 percent owned by
Deutsche Telekom .
Sprint's stock rose 1 percent to close at $9.87 on Tuesday,
while the shares of rival T-Mobile US slid 0.8 percent to end at
$33.22. Verizon Communications' stock, one of the 30 that make
up the Dow Jones industrial average, shot up 1.3 percent to end
at $49.30 in New York Stock Exchange trading on Tuesday.