Orange County Register

If being able to call friends and family overseas anytime you feel like it for just $5 a month on your cell phone sounds unbelievable, it is, insists Irvine’s Boost Mobile.

The prepaid mobile phone provider took umbrage with rival MetroPCS, which announced such a deal on Wednesday. MetroPCS subscribers can now make unlimited calls to more than 1,000 cities worldwide with the new international plan, which is $5 per month when added to plans of $40 or more.  

“Anything can be profitable depending on the usage,” said Justin Brenan, Boost Mobile’s business director. “They’re obviously taking a bet on the usage. … They’re betting customers won’t use it very much.”

Consumers need to look closely at the details of the plan. Brenan says that calls to cell phones in Mexico aren’t included in MetroPCS’ unlimited plan, which is “a pretty big omission by MetroPCS,” he said. MetroPCS has not responded to the charge, but an attempt to see whether some Mexico-based wireless numbers on MetroPCS’ phone number lookup site qualify was negative. 

MetroPCS could be making money by forcing customers to upgrade to more expensive plans. Or it could be using inferior voice-over-internet technology, Brenan theorized. It could also be hiding fees and taxes so the $5 a month is just a minimum of what a customer pays. 

“We really have seen some seemingly impossible offers like this come from MetroPCS before and what happens is they disappear very quickly, which make it seem that it is too good to be true,” he said.

But the main reason why such pricing is impossible is settlement rates, which have been an international calling issue for years. Mobile companies in other countries charge these tax-like fees on foreign calls made to phones in their wireless network. Rates vary by country and differ from rates placed on calls to landline phones. In Boost’s case, calls to landlines in Mexico are $0.02, while calls to wireless phones are $0.10 per minute.

MetroPCS wouldn’t elaborate on how it plans to make money off the international plan. But in a statement, the company said it is profitable: “We don’t disclose pricing or profitability on individual products. However, our company is extremely profitable even with the launching of new markets and we have some of the lowest operating costs in the industry.”

In past interviews, MetroPCS told me it saves money in several ways, such as an all-electronic billing system with no paper bills and offering unlimited service on everything to simplify the business (read the earlier “MetroPCS’ intriguing cheap wireless service offer.”)

Boost may just be worried about losing customers to the fast-growing MetroPCS. The prepaid carrier revamped its strategy last fall from an edgy, youth-oriented mobile company to an edgy, value-oriented company (read the earlier “Boost Mobile to focus on value, drops youth campaign.“) 

MetroPCS, which has always targeted people in search of a good value, has only seen subscriber numbers grow. At last count, the company added 684,000 subscribers during the first three months of 2009. It’s currently at 6 million subscribers.

Boost has no flat-rate international plan but charges per-minute fee to call a foreign number. However, the company recently added unlimited international text and walkie-talkie plans for $10/month. International service is far from a cash cow for Boost, Brenan said. Rather, it offers very “slim margins” for the company.

“I can guarantee you that we aren’t making a lot of money,” Brenan said.

Whether MetroPCS is just testing the unlimited international program is unknown, but it sounds like something consumers should look into first. The company still offers the $3/month unlimited plan to Mexico, which was introduced in April. That plan includes only calls to landline phones in Mexico.

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