7-Eleven enhances prepaid cellphone service
7-Eleven Inc., the convenience store chain that launched its own prepaid cellphone brand last spring, is rolling out two big enhancements this week in New England markets: premium handsets with cameras and FM radios, and minutes that don't expire for a full year.
7-Eleven's moves are likely to crank up competition in the fast-growing US market for prepaid wireless calling plans, which Boston market consultant The Yankee Group expects to grow from 18 million subscribers at the end of this year to over 24 million by 2007. Key drivers: parents looking for cost-capped phones for their children, and people of all ages looking to control wireless spending.
With the new phones and longer-lasting minutes, 7-Eleven's Speak Out Wireless service, which charges 20 cents a minute for local and long-distance calls both day and night, can compete more effectively at both the high and low ends of the wireless market.
Major national brands such as Verizon Wireless and Cingular Wireless LLC generally sell camera phones only to people willing to sign long-term contracts. And at the low-budget end of the market, people looking for a so-called glove compartment phone -- one they keep for emergencies or only very occasional use -- have been able to get minutes that last for a full year mainly from TracFone, which sells bare-bones Nokia and Motorola phones, including used phones that have been reconditioned.
Big national carriers such as Verizon Wireless, Cingular, and T-Mobile generally offer minutes that expire within 30 to 90 days unless subscribers pay for more airtime. AT&T Wireless Services Inc. offers airtime that lasts for a year only if subscribers spend $100 for a block of 665 minutes.
7-Eleven, whose services use Cingular's network, had been offering minutes that expire after 120 days. After getting 50 minutes with the phone, subscribers have to buy additional minutes in increments of $25 for 500 minutes.
''Customers told us they wanted some better choices," said Kevin Cooper, manager of the 7-Eleven wireless program. ''They wanted the latest and greatest with a straightforward billing plan." 7-Eleven has not released any data on how many customers have signed up for Speak Out, but Cooper said that ''Boston is one of the best markets in the country" for adoption of the service.
Andrew Cole, head of the wireless practice at consultants AT Kearney, said after its initial focus on people looking mainly for a good value in wireless phone service, ''It is a little surprising to see 7-Eleven moving to compete in the area of non-voice services, but I understand why they felt they need to do that. They need to ramp up subscribers very quickly," Cole said, particularly as more non-cellphone companies look to launch wireless brands in coming months, possibly including Walt Disney Co. and Target Brands Inc.
The three new phones coming to the 166 7-Eleven stores in Southern New England include a $110 Nokia 3200 with a camera, FM radio, and flashlight; an $85 Nokia 3100 with a color screen that can be loaded with photos and graphics; and a $50 Nokia 3595 that offers voice dialing for 14 numbers and color graphics. All prices are after a $50 rebate.
For now, Speak Out customers cannot transmit photos from the phone to other phones or e-mail accounts, but they can take pictures of family members and friends and link them to their phone numbers to create a ''photo caller ID" that flashes the picture of the person making an incoming call.
7-Eleven's flat rate of 20 cents a minute is one of the simplest price plans for prepaid wireless, but not necessarily the cheapest.
Verizon charges 25 cents a call plus 10 cents a minute. Cingular's KIC prepaid runs 35 cents a minute weekdays and 10 cents on nights and weekends.
Virgin Mobile charges 25 cents a minute, dropping to 10 cents if subscribers make more than 10 minutes of calls daily. Subscribers must buy $20 worth of minutes every 90 days.
And for people who just want an emergency or special-occasion phone, TracFone charges $100 for reconditioned Motorola 120 and Nokia 1221 handsets that come loaded with 350 minutes of airtime that lasts for a year before expiring.
Peter J. Howe can be reached at howe@globe.com.
