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Virgin Mobile gets iPhone for USD549, USD 30 per month


NEW YORK (AP) ? Virgin Mobile USA,
one of Sprint's brands for prepaid,
no-contract phone service, said
Thursday it will start selling the
iPhone on June 29, charging USD 549
for a basic model. The high price of the phone comes
with an upside: service will start at
USD 30 per month. That means the phone, plus two years
of service, will cost USD 1,269,
excluding taxes. That's nearly USD
800 less than a subscriber would pay
for the same phone, an iPhone 4 with
8 gigabytes of memory, if buying it under the Sprint Nextel Corp. brand.
Sprint charges USD 100 for the phone
and USD 80 per month for service,
excluding taxes. The iPhone has until recently been
restricted to contract-based plans.
Now, the floodgates appear open for
the phone to enter the prepaid, no-
contract market, which is aimed at
people with low incomes and poor credit. However, the high initial cost of
the phone is likely to be an obstacle.
Virgin Mobile sells other smartphones
for as little as USD 80. Last week, Leap Wireless International
Inc., the parent of the Cricket prepaid
service, said it would start selling the
phone on June 22, starting at USD
400 and USD 55 per month. Leap's
CEO said the phone would likely account for about 10 percent of the
phones it sells over the next few
years. For Apple Inc., the maker of the
phone, expanding sales to the no-
contract segment means a chance to
reach buyers who don't have the
credit for contract-based plans, or
don't want to be tied down with contracts. The number of people on
contract-based plans has plateaued,
and actually contracted for the first
time in the first quarter of this year.
Meanwhile, the number of people on
no-contract plans is still growing. In addition to the iPhone 4, Virgin
Mobile USA will sell the iPhone 4S, the
model launched last year, for USD 649
with 16 gigabytes of memory. Virgin Mobile's cheapest plan cost USD
35 per month, with a USD 5 discount
possible for buyers who set up
automatic monthly payment with a
credit card, debit card or PayPal
account. It provides 300 minutes of calling per month and unlimited
texting. Data usage is also
"unlimited," but is slowed drastically
after the customer has used 2.5
gigabytes since the start of the billing
cycle. IPhones with "Sprint" service have true unlimited data. Virgin Mobile just introduced its first
"4G" phone, the USD 300 HTC Evo V
4G, which can use Clearwire Corp.'s
data network in addition to Sprint's.
The iPhone, on the other hand, is
limited to Sprint's "3G," or third- generation network, which is slower
than those of the big iPhone sellers:
AT&T Inc. and Verizon Wireless. Sprint started selling the iPhone last
fall, after its two bigger competitors.
Sprint said the iPhones it buys from
Apple for Virgin Mobile will count
toward its commitment to buy USD
15.5 billion worth of phones over three years. That's a big and risky
undertaking for Sprint, which is in a
precarious financial position. The
company also said it doesn't expect
Virgin Mobile's iPhone sales to
materially affect its 2012 operating income before depreciation and
amortization. Sprint shares rose 7 cents to USD 2.79
in early trading. Sprint, which is based Overland Park,
Kan., doesn't say how many
subscribers Virgin Mobile has. Sprint
over all has 15.3 million subscribers
on no-contract plans, under the
Virgin, Boost and Assurance Wireless brands. It has 32.8 million subscribers
on Sprint and Nextel contract-based