Nextel Lowering Penalties for Long Winded Callers
By Eric Lin, Thu Apr 29 20:30:00 GMT 2004

Nextel is set to test new plans May 1 that will make it less expensive for callers to go over their minutes- even bumping them up to the next calling plan if that is cheaper.


Nextel is testing new "Flex" plans in a few markets that will save money for callers who go over their minutes. The plans will either charge 25 cents per minute for extra minutes or bump customers up to the next calling plan, whichever will be cheaper. Plans are expected to start at $40 for 400 minutes and run all the way up to $90 for 1200 minutes or $250 for unlimited calling (which would defeat the purpose of new plan).

Bear Stearns analysts Phil Cusick predicts these new plans will replace the National Value but shouldn't cause Nextel to lose any revenue. Although extra minutes will only cost 25 cents as opposed 40, the Flex plans include less minutes to begin with, discreetly encouraging subscribers to start with a more expensive plan or run over their minutes more often.

RCR News hypothesizes that the move might have been made to pre-empt Sprint PCS, which is supposed to launch similar plans in mid-May. They tell us Sprint's new plan is supposed to give subscribers a bucket of low-cost extra minutes they can draw from when they go over.

Cingular already offers "Rollover" on most their plans, which allow subscribers to save unused minutes from previous months to apply against their account if they exceed their allotment in the future. While carriers still look for ways to generate more revenue, it seems that they've chosen to ease the penalties for using their services more often. This is certainly a friendlier approach than most US subscribers have experienced in the past.