Sprint Corp. said on Monday it would offer a mobile phone pricing plan that automatically gives users extra blocks of time at reduced rates if they use more than their monthly limit.
Analysts said the move by Sprint, like a similar plan from Nextel Communications Inc., was aimed at reducing customer ire at complicated charges for cellular service, driving increased loyalty and market share.
Sprint said a typical version of its new plan would offer 300 minutes of usage a month for $35. If a customer used up all 300 minutes, Sprint would automatically add more time in blocks of 25 or 50 minutes for $2.50, up to 1,250 per month.
In most Sprint plans, extra time above the plan's base amount costs 40 cents per minute, rather than the 5 cents to 10 cents per minute charged under Sprint's new plan.
Sprint President Len Lauer said the plan had come out of research into customer complaints about wireless service. He said Sprint would promote the plan with a large advertising campaign, and expected up to half of new users to choose the new plan over traditional ones.
"We've got the facts behind it," Lauer said. "We believe a lot of customers burned by overage (overuse) or underage (underuse) will find this attractive."
Lauer said the plan would not reduce Sprint's average revenue per user. He also said the plan took Sprint about nine months to develop and put into place, and said other wireless companies would need at least that much time to attempt to copy if it proved popular.
Sprint also said it would offer a $150 credit for a new phone to users who kept their current phone for 18 months, and would let new customers try out different plans for the first 90 days of their contracts.
Other carriers have used different strategies to attempt a better fit between customers' usage and their bills. Nextel's trial plan would let customers who talk for more time than allowed to automatically upgrade to a costlier plan with more minutes.
Cingular Wireless, a venture of BellSouth and SBC Communications, lets customers carry over spare minutes into the next month if they have not used up their minute allowance in a given month.
Forrester Research analyst Charles Golvin said all such offers were an attempt to hold onto users in a market where millions of customers swap companies every year.
"Consumers have a hard time doing a comparison between service providers primarily because there are so many moving parts," Golvin said.