Traditionally, Boost has come in third in the prepaid MVNO-ish category, behind TracFone Wireless
and Virgin Mobile USA. But it’s making bigger moves in the unlimited category, treading into
territory historically dominated by Leap Wireless and MetroPCS.

If you recently visited www.boostedmobile.com, you wouldn’t find a cell phone anywhere on the home page. Instead, the site promoted the likes of Madsteez, a multifaceted artist born on the East Coast with the three first names of Mark Paul Deren. He has spent the last nine years perfecting his life as painter, illustrator and graphic designer while living in Southern California.

The Boosted Tin Can Speaker Set Vol. 1 are battery-operated speakers intended as a platform for artists to showcase their artwork in a unique way.

What does he have to do with wireless? Everything, if you’re Boost Mobile. And you can expect to see more artist initiatives from Boost in the coming year. It’s all part of that wonderful world of Boost Mobile – not quite an MVNO and not a regional carrier. Nor is it a solely unlimited play like that of Leap Wireless International or MetroPCS, although it has been getting more serious as a flat-rate contender. Owned by Sprint Nextel, Boost enjoys the advantages of being closely affiliated with the nationwide carrier while reaping a certain autonomy that lets its leaders scout for cool new artists, develop Boosted as a lifestyle brand and latch onto novel social networking solutions like those from loopt and Intercasting.

Its link to Sprint also can have its down sides – as it did when Sprint had to pull back on Boost’s growth when the iDEN network couldn’t support it. Boost representatives say that reined-in growth is now a thing of the past, and the company is excited about expanding Unlimited by Boost, the flat-rate CDMA service that competes most directly with Leap/Cricket and MetroPCS.

Boost Timeline

THE LIMITS
With iDEN and CDMA combined, Boost has about 4.5 million subscribers, which is probably a decent amount considering its growth was limited, analysts say. “They could sell many times what they have sold,” says Roger Entner, senior vice president at IAG Research. “It’s just that for every Boost [iDEN] customer you put on, there’s only a limited amount of spectrum available for iDEN,” he says. “They’re as successful as corporate policy allows them to be, and from a corporate perspective, it’s the right decision to limit the growth of Boost.” After all, he adds, how many $35 Boost customers do you want to add at the expense of a $70 Nextel legacy customer?

Current Analysis Analyst Matthew Kunkle agrees, adding that QChat, the CDMA push-to-talk (PTT) service that Sprint is expected to launch this year, will provide a transition for users onto the CDMA system, where they can be upsold in high-speed data services, something that couldn’t be done with the iDEN infrastructure. The capability was there in hybrid CDMA/iDEN PowerSource phones, but it never made it to Boost because the phones were costly, he says.

Boost Growth

While Boost executives aren’t yet spelling out their plans for QChat, Kunkle says he expects to see PTT capability in Boost CDMA devices sometime in 2008. The QChat service meshes with Boost’s strategy of offering the Unlimited by Boost services, he says.

And that’s exactly where Boost appears to be growing the most. Unlimited by Boost had 224,000 subscribers at the end of the third quarter, adding 124,000 customers in the third quarter alone. The 10-state expansion of Unlimited by Boost follows on successful launches last year in California and Texas.

Fewell: Wants to do things differently.

GETTING BOOSTED
But the unlimited offer expansion is only part of the story. Another part of Boost’s strategy is creating a lifestyle brand through Boosted, a brand that can be parlayed into international markets rather than strictly tied to the Boost Mobile communications service that is specific to the U.S. market. Through Boosted, the company is extending into new areas of content, fashion-related lifestyle accessories and even desktop toys.

Mark Fewell, senior director of business development and media at Boost Mobile, likens it to Nike and its special edition products that aren’t part of the main line-up. The lifestyle accessories include everything from backpacks to tin-can desktop speakers, and they often involve artists, such as Madsteez and Claw Money, who lend their names and designer details to the products.

Fewell’s job isn’t one you might find at a traditional wireless service provider. Part of the time, he and his team are out scouting for new artists. “The nice thing is we’re very genuine about our desire to not only launch cool products but be involved in these lifestyle communities and do things in ways that haven’t been done before,” he says.

That desire to do things differently is one of the reasons Fewell is still with the company. He was one of the early stockholders of the Boost brand in Australia, where it started in 2000 before moving to New Zealand in 2001 and the United States in 2002. The 43-year-old probably is the oldest member of the Boost Mobile team, but he says his young-at-heart philosophy keeps him in the loop. Boost’s target market is 18- to 35-year-olds, although it skews up and down somewhat.

The artists with whom Boost works are a combination of what Boost executives discover themselves and what other people suggest. “We think it’s cool, but we’re not saying, ‘This is the coolest thing,’” Fewell explains. “We want that element of discovery. People want to discover things for themselves.”
That’s not to say the Irvine, Calif.-based company is backing off its sports-oriented themes. After all, it brought U.S. professional surfing back to the U.S. mainland in 2002 with the Boost Mobile Pro Surf. But how does the action sports world intersect with the art world? Well, young people are interested in a lot of different areas, from music to art to sports, Fewell explains. “It’s really a broad lifestyle,” he says, and it’s not that different from a multitasking 16-year-old. “What we’re trying to do is create a very universal brand.”

THE NON-MVNO
Perhaps by natural extension, a lot of what Boost is doing sounds similar to the content-oriented services that Amp’d Mobile offered before it went under last year. An MVNO led by Boost Mobile founder Peter Adderton, Amp’d targeted the youth market, and a lot of former Adderton colleagues are still at Boost Mobile. But that’s where the similarities end, according to Boost executives.

Lanzon: Boost understands budget control and bill predictability.

First, Boost isn’t an MVNO, even though it might look like one on the surface. Second, Boost’s success is a matter of timing. When it launched in 2002, it was a new space, with few others competing outside of Virgin Mobile USA. Boost started as a joint venture with Nextel and then became a subsidiary of Nextel. “We came into the market at the right time,” Fewell says. “It’s a tough market to come into now, and I think certainly people have made very committed, solid attempts at it and still failed. When a brand like ESPN can’t make it, that’s a sign.”

At the end of the day, Boost Mobile represents irreverency and authenticity, says Michael Lanzon, vice president of sales and marketing. Lanzon is one of Boost’s original members who helped launch the brand in Australia and New Zealand. He was recently named vice president of sales and marketing, a new position within Boost designed to bridge and integrate Boost’s branding and marketing campaigns into the sales channel in a more deliberate and defined manner.

Lanzon admits a lot of carriers are focused on the youth market, particularly 16- to 24-year-olds. But Boost is positioning itself as a service provider that understands their needs for budget control and predictable bills. “We offer a solution that says, ‘Come to us. We will offer you a product that is right. It’s on a great network, full national coverage, competitive pricing.’ The difference between us and other prepaid phone providers is we take it one step further.”