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The Bug is Back: AT&T’s Cricket Brand Launches New Ho-Hum Plans That Are More of the Same

Cricket has relaunched its website with a new logo and service plans as new owner AT&T merges its value-conscious Aio prepaid offering under the acquired Cricket brand name.

Targeting the credit-challenged, Cricket’s new service plans are not groundbreaking, basically copying Aio’s recent offers. Swept away are the low-cost “pay when you use” plans that only levy charges on the days you actually use the phone. Instead, Cricket is looking for a longer, committed relationship with month-long service plans and loyalty discounts:

cell plans

The relaunch of Cricket will bring changes for existing customers as AT&T begins to decommission Cricket’s freestanding CDMA 3G network in March 2015 in favor of AT&T’s GSM 4G LTE service. That means customers with current Cricket phones will need to eventually switch to a newer handset, a process being made easier with $50 rebates that can make some of Cricket’s smartphones available for free. Enroll in Cricket’s rewards program, stay with them a year, make your payments on time and you will also get a $50 device credit which can be used towards an upgrade next year.

cricket-logoCricket’s data plans do not carry automatic overlimit charges. Instead, your data connection is throttled to 128kbps until your billing period resets. Customers can buy an extra gigabyte of data at any time for $10.

There are several other changes that probably won’t affect the majority of Cricket customers:

  • There is a $5 discount for every month you are enrolled in Auto Pay to keep your phone active;
  • A family plan discount provides $10 off the monthly service charge of a second line, $20 off the third line, and $30 off the fourth and fifth line, for a maximum discount of $90 a month;
  • While you remain on your current Cricket service (on the CDMA network) you may keep paper billing. When you transition to the new Cricket (the 4G GSM network with nationwide coverage), you will no longer receive a paper bill;
  • Customers participating in the 5 for $100 promotion can continue with this rate plan only while on the Cricket CDMA network;
  • Cricket no longer offers military or friends & family discounts;
  • Cricket will transition out of the wireless Lifeline program. Current Lifeline customers can use Cricket’s CDMA network until it is shut down, after which they must choose a different provider;
http://www.phillipdampier.com/video/Cricket Home New Cricket Merger Info.mp4

AT&T keeps its name and brand completely off the relaunched Cricket and Aio combined website. This introductory video explains the merger of the two wireless brands and what customers can expect. (1:44)

Goldman Sachs Suspected of Involvement in Suspicious Leap Wireless Stock Options Money Party

inside tradeBuying shares in a public company used to be straightforward and simple. Buyers instructed their broker to trade shares with the simple maxim: “buy low, sell high.”

These days, things are more complicated thanks to wealthy investment banks that have created Wall Street’s version of a Las Vegas casino. Today, buyers don’t even need to purchase shares in a company — they can make a killing just by betting whether they believe a share price will increase or decrease.

The Options Regulatory Surveillance Authority is now investigating a sudden surge in such option trading just before AT&T launched its $1.19 billion cash bid for Leap Wireless, owner of the Cricket-branded prepaid cell service.

The unnamed buyers included investment bank Goldman Sachs, that either traded options for themselves, on behalf of well-heeled clients, or simply processed the trades as part of doing business.

Those who purchased the call options were either clairvoyant, extremely lucky, or had inside knowledge of the yet-to-be-announced deal and were able to buy thousands of lucrative contracts that bet Leap stock would make a sudden recovery and increase in price. Nanex reports an explosive increase of 15,749 Leap “call contracts” trading hands that week, according to a report in USA Today. That well-surpassed that same week’s 1,384 Leap “put contracts” — investors making the safer bet that the always-anemic Leap stock would fall in price even further. That particular week, they were very wrong.

During the last 15 minutes of trading on July 12, 2,536 Leap contracts were executed, and nearly 80 percent of them gave buyers the right to purchase Leap shares for $9 each through Aug. 16, an amazing display of confidence in a stock that traded as low as $6.58 per share a few weeks earlier.

Leap into the big money pool.

Leap into the big money pool.

Other investors were left scratching their heads over the wisdom of that kind of trading until just after the market closed that day, when AT&T announced its intention to buy the prepaid carrier, boosting Leap’s stock price from $7.98 on July 12 to $17.23 on Monday, July 15.

“Did someone know something early in Leap Wireless?” asked Jon Najarian, co-founder of Option Monster, a provider of options-trading ideas, in a written commentary for TheStreet.com. “The question now is whether someone will end up in prison for insider trading.”

While the unnamed parties likely made a handsome and quick profit, the brokerages that sold the options took a beating.

“We, as market makers … sold these calls,” said Thomas Peterffy, head of Timber Hill and an affiliated group of brokerages. “When the news came out, we had an immediate loss of $1.5 million.”

Goldman $achs

Goldman $achs

Timber Hill promptly filed a request for an investigation into potential illegal insider trading with the Options Regulatory Surveillance Authority that has since responded it was reviewing the issue “to determine if any exchange or Securities and Exchange Commission rules may have been violated.”

A Nasdaq spokesperson did not respond to messages seeking comment. Goldman Sachs also declined to comment.

Peterffy told the newspaper securities regulators should pursue examples such as the Leap Wireless options trading, “where it’s very clear what happens.”

“This has been going on for 20 years. It happens all the time, happens about 20-30 times a year. And we’ve never seen a penny from this stuff,” said Peterffy.

AT&T’s Purchase of Cricket-Leap Wireless Wins Hundreds of Millions in Tax Writeoffs

cricketAnalysts were surprised at the premium price AT&T agreed to pay when it announced last month it was acquiring Leap Wireless — owner of the Cricket brand prepaid cell phone service — for $1.2 billion plus assuming $2.8 billion in net debt. But newly released documents show AT&T will win significant tax concessions allowing it to shelter hundreds of millions in revenue from the tax man.

In fact, the more Leap Wireless piles up debt and hemorrhages customers, the more AT&T’s taxes go down.

If AT&T wins approval for its deal to take over Cricket’s dwindling customer base, wireless spectrum, and the company’s existing wireless network, it will receive 20 years of tax savings from “pre-change” losses, offering AT&T a tax shelter worth $155 million in taxable income a year. That means AT&T will see at least a $60 million reduction in its tax bill each of the first five years after the deal is approved. Then the savings decrease somewhat for the next 15 years as AT&T gets to write off $35 million annually.

Despite Cricket’s efforts to promote its bundled music and prepaid cell services as an industry game-changer, customers did not agree.

On Thursday, Leap admitted Cricket lost $163 million, or $2.09 per share, on revenue of $731 million for the quarter ended June 30. The company also saw 18 percent of its customers leave over the past year, with 4.8 million remaining. Leap management admitted it was becoming increasingly difficult to compete because its network was smaller than its larger competitors and Cricket had trouble acquiring the hottest smartphones to sell to customers.

Leap has been peddling Cricket on the wireless market since 2009 with no takers, even after it began to slowly pursue a network upgrade to 4G LTE service that was more promise than reality. Recent disclosures show the company lacked the money to expand more quickly.

AT&T still showed little interest in the little carrier that couldn’t over the course of 2012.

att cricketIn May, as T-Mobile closed in on its takeover of similarly sized MetroPCS, things changed. AT&T ended up being the sole bidder for Cricket, offering $9.50 a share.

AT&T raised its offer to a whopping $15 a share after Leap executives promoted Cricket as a useful brand for AT&T to improve its standing in the prepaid market. But executives also sold AT&T on the fact Leap was lousy in debt, which opened up significant tax savings opportunities for AT&T.

BTIG Research’s Walter Piecyk thinks AT&T is shelling out a lot for Leap, even after considering the tax and spectrum benefits. But more than anything else, AT&T may have been willing to pay a premium for Cricket just to make sure none of its competitors, particularly T-Mobile, got there first.

The deal still requires approval by the Federal Communications Commission with a likely weigh-in from the Department of Justice’s Antitrust Division.

http://www.phillipdampier.com/video/Bloomberg ATT Buys Leap Wireless Who Wins 7-15-13.flv

Moffett Research senior research analyst Craig Moffett tells Bloomberg News AT&T’s acquisition of Leap Wireless sticks it to competitors, in particular T-Mobile. AT&T’s purchase blocks T-Mobile and other carriers from getting access to Cricket’s wireless spectrum. Moffett also talks about the trend towards wireless mergers and acquisitions and how Verizon and AT&T got stuck with unwanted, unsold iPhones that could cost the companies millions. (6 minutes)

Wireless Consolidation: AT&T Buying Leap Wireless/Cricket in $1.2 Billion Transaction

att cricketAT&T announced late Friday it was acquiring Leap Wireless for almost $1.2 billion — a premium of 88 percent over Leap’s stock price.

Creditors may be pleased. Leap Wireless had $2.8 billion of net debt which is expected to be retired by AT&T as part of the buyout.

The Cricket prepaid brand is expected to survive the acquisition, at least for now. Unlike many other prepaid providers, Leap Wireless owns and operates its own CDMA and LTE cell network in its “home service” areas. The Cricket brand is best known for its PCS prepaid service, which is targeted almost exclusively in urban areas. Leap has an extensive roaming agreement with Sprint to provide service where its own cell network does not reach.

AT&T has not said if it will eventually convert Leap’s CDMA network to the standard AT&T uses — GSM. It may not be as important in the future as LTE becomes available to five million Cricket customers. AT&T said the purchase would open Cricket users to roaming on AT&T’s cellular and data networks, which cover a larger service area than Sprint. The biggest impact may be felt by Cricket’s dealer network. AT&T is likely to move the Cricket brand “in-house” and market it within AT&T stores.

Both AT&T and Verizon Wireless have been strongly urging on consolidation in the wireless provider market. Executives at both companies and several Wall Street analysts predict America will eventually have three major carriers, presumably Verizon, AT&T, and a consolidated Sprint, which could eventually acquire T-Mobile. These predictions all assume federal regulators will accept the wireless industry’s premise that fierce competition will remain with fewer providers. A handful of small independent providers may continue to exist as outliers, but most do not believe they will have any significant impact on the market share of the top three.

leap-logoMany wireless industry observers believe AT&T is not interested in Leap/Cricket because of its business model. It is Leap’s spectrum holdings in large urban markets that makes it an attractive takeover target.

AT&T expects no problems with regulator approval and anticipates the acquisition will be complete by early 2014.

“The combined company will have the financial resources, scale and spectrum to better compete with other major national providers for customers interested in low-cost prepaid service,” AT&T said in a release on Friday.

Cricket Takes On AT&T/Verizon With Deceptive ‘Unlimited’ Plan With a Throttle After 1GB

cricket planCricket wants to convince you that paying AT&T or Verizon $90-120 a month for a cell plan with unlimited calling, texting and a 1-3GB data plan is too much, because it can sell you an “all-unlimited plan” for $45.

Cricket this week launched its “Half Is More” marketing campaign online, as well as in print and television advertisements.

“When we go out and talk to a lot of consumers, we hear a lot of angst from post-paid subscribers,” Cricket senior vice president Tyler Wallis told CNET. “They’re not happy with the service they’re getting and they’re feeling like they’re getting gouged.”

They also might not like finding out their “unlimited use” data plan actually comes with a barely disclosed speed throttle that kicks in after only 1GB of usage, reducing speeds to near dial-up for the rest of the billing cycle.

Cricket defends the claim they offer “unlimited” data service by stating they do not completely sever a customer’s data connection when they reach the limit, or charge them overlimit fees. They just slow the service down… a lot. Cricket customers tell Stop the Cap! Cricket’s wireless Internet becomes almost unusable once they are placed in the usage penalty box.

Cricket also depends heavily on Sprint for roaming coverage outside of the small number of home markets where Cricket owns and operates its own network. For many customers, that means frequent roaming on Sprint’s 3G network, which is not rated well for its speed and performance.

Once throttled, customers are stuck in the slow lane until their next billing cycle begins.

Customers with light data needs might find Cricket’s plan an option, assuming they have good coverage either from Cricket itself or roaming on Sprint’s network.

Cricket’s campaign noticeably avoids comparing their plan against T-Mobile, which offers a $70 monthly truly unlimited plan or for ten dollars less, a 2GB plan with unlimited calling and texting.

http://www.phillipdampier.com/video/Cricket Ad Unlimited 5-13.mp4

How easy can you read the white fine print disclaimer on the white background in Cricket’s ad? Cricket advertises unlimited data but keeps its speed throttle mostly to itself. (1 minute)

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