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Sprint New 'Framily' Plan: Ugly Name, But A Beautiful Entrant Into The Mobile Price War

Jan 8 2014, 9:21am CST | by

Sprint New 'Framily' Plan: Ugly Name, But A Beautiful Entrant Into The Mobile Price War

Photo Credit: Forbes

Pity poor Sprint. With the AT&T-T-Mobile war garnering all the headlines, the number three mobile carrier has had a tough time making news lately. Needing to do something to regain consumer attention, Sprint jumped into an increasingly competitive U.S. wireless battle yesterday with something it calls the “Framily” plan, a portmanteau of friends and family. Forget that the name is hideous. If you can muster a group of 7-10 lines and Sprint’s coverage works for you, the Framily plan could potentially save you hundreds of dollars per year. It’s hard to see how this is going to work out financially for Sprint, but it’s yet more evidence that T-Mobile CEO John Legere’s shakeup of the staid marketplace is leading to big wins for consumers.

What you get

As always, the offering is too complex so this will attempt to simplify the details. With one line on a Framily plan, you get unlimited voice minutes and text messages along with 1GB of data for $55 per month. That’s already a decent discount versus the $70-90 you’d pay on AT&T or Verizon (none of these include taxes or regulatory fees, which vary by market). As you add people, though, the rate goes down for everyoneFor each person who joins the Framily, you get a $5 discount per line, potentially lowering the monthly bill per person to $25 (at 7 lines, which yields 6 discounts of $5, $30 in total, $55-30=$25).

Your Framily can have at most 10 lines, but everyone gets and pays their own bill. This makes it easier to manage than a Share Everything plan on Verizon with your mom, mother-in-law, and good friend in Hawaii (disclosure: it’s likely I have experience with such a plan). The downside of Sprint’s plan is that you can’t share the data among the lines; everyone gets their 1GB. The good news is that an upgrade to 3GB is only $10 more per month and an upgrade to unlimited data is only $20 more. In addition, the $20 option includes the right to trade in your phone and get a new one every year.

What you don’t get

In order to offer such aggressive pricing, Sprint can’t afford to subsidize your phone purchase with Framily plans. This means no $199 Galaxy S4 or iPhone 5s. Instead, you either have to pay full price ($600 for the Samsung, $650 for the Apple) or buy the phone in monthly installments. This is akin to the way T-Mobile now sells all their phones; Sprint, by contrast, still offers discounted phones with 2-year contracts on some rate plans.

As an existing Sprint customer, you may also have to sort out some eligibility issues. Sprint doesn’t benefit much if a bunch of accounts paying $50-80 per line suddenly combine into accounts paying $25-45 per line so it’s simply not allowed. The only way around that would be to leave Sprint and return. That’s convoluted but doable if you’re off contract — you can port your number to a prepaid line with another carrier then bring it back to a Framily group on Sprint. It’s not possible if you’re under contract with Sprint unless you first break the contract, paying a fee, and then port your number twice. (This helps explain how the math works for Sprint: By only really offering the plan to new customers and/or without discounted phones, the cheaper rates won’t kill its margins.)

There are also issues if you have a plan that came with a discounted phone. You can sort those out with a simple Sprint questionnaire but in the worst case you’ll simply pay $15 more per month for a period of time to settle up for your discount. The savings on the Framily plan might justify that for some people.

Is it really worth it?

For a lot of people, the answer here will be yes. Many won’t need more than the basic 1GB of data and even with the $10 bump for 3GB per line, the pricing is still appealing. But let’s take a scenario where you only find five people you know who are happy with Sprint. The cost is $35 per line, $45 with the extra data — $175-225. On Verizon, that plan would be $300 with 10GB of pooled data. (Again, none of these prices include taxes and fees.) Because most people have variable data usage, the Verizon plan would cover the group almost all the time: Sometimes you’re using a lot, aunt Sally isn’t; next month, she’s streaming Pandora on the beach, you’re home playing Words with Friends on Wifi. The extra fees paid by the Verizon group would total at least $1800 over 2 years. But they’d buy five discounted phones, with potentially $2250 worth of discounts.

If people used even less data, the Sprint and Verizon bills both get cheaper. If people use more data, pooling on Verizon helps keep costs down but the fact they are capped on Sprint is a helped in a really heavy use group. And it’s certainly the case that a 7-line Sprint group will see bigger savings than this example. So while it’s not always a big money saver, it often will be. Framily allows everyone to act as a recruiter to the plan. They just need the ID code they used to join in the first place. A Framily has no manager and can’t kick out unruly members. But since it’s really only a volume-purchase group, that shouldn’t be a problem in most cases. (For more details, the Sprint FAQ is here.)

T-Mobile is expected to have its own family plan news shortly, but in the meantime, Sprint has already made grouping together more attractive just weeks after AT&T did the same. And all this was in response to actions by… T-Mobile. Whether Verizon can continue to sit this out entirely remains to be seen, but whatever happens, this space will attempt to sort it out for you.

Follow me on Twitter and on Facebook. Find the rest of my Forbes posts here.

Source: Forbes

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