Sprint's Virgin Mobile to Offer iPhone
Sprint Nextel Corp. is set to become the second U.S. mobile-phone carrier to offer Apple Inc.'s iPhone on a pay-as-you-go basis. — Sprint will announce this week it will offer the popular smartphone on its Virgin Mobile pay-as-you-go brand as soon as July 1 …
Context & Ripple Effects
This move is the next chapter in Sprint's 'bet the company' iPhone commitment, announced in October 2011, which put the iPhone at the center of Sprint's lineup ahead of rivals. Reports that Sprint would get the then-unreleased iPhone 5 had already positioned the carrier as Apple's most aggressive U.S. partner; extending the phone to Virgin Mobile now pushes that bet beyond the contract market into pay-as-you-go, where no major carrier had sold the device before. The pickup across eight outlets — CNET, Engadget, the Los Angeles Times and others — signals how closely the prepaid question is being watched.
First-order effects
- Starting as soon as July 1, Virgin Mobile becomes the second U.S. carrier to sell the iPhone on a pay-as-you-go basis, giving prepaid customers access to a device previously locked behind two-year contracts.
- Sprint deepens its financial exposure to Apple: every subsidized prepaid iPhone sold adds to the wholesale cost of the bet it made in October 2011, now spread across both its postpaid and prepaid brands.
Second-order effects
- AT&T and Verizon face pressure to respond in prepaid, since a no-contract iPhone undercuts the core justification for their contract-subsidy model; T-Mobile, still without the iPhone, falls further behind on flagship availability.
- Sprint's network carries the strain: it has confirmed keeping unlimited data for the next iPhone while selling LTE-capable phones like the Galaxy Nexus before its own LTE service is live, so added prepaid volume lands mostly on its 3G network.
Third-order effects
- If prepaid iPhone sales hold up, the two-year contract stops being the default way Americans buy flagship phones, pushing all four national carriers toward month-to-month and device-installment pricing structures.
- The move also tightens the industry's dependence on Apple, as carriers compete to subsidize a single must-have device — a supplier-power dynamic Sprint accepted explicitly when it bet the company on the iPhone.
The trend: Premium smartphones are migrating from contract subsidies into prepaid channels, eroding the postpaid/prepaid divide that structured the U.S. wireless market.