Don’t tell Irvine-based Boost Mobile LLC it’s getting corporate.
The company, founded back in 2002 to sell mobile phones to the surf and skate crowd, says it’s staying young, staying hip and still growing in the prepaid wireless phone market, though some expansion is being pulled back.
Surfers and skaters still roam the halls of Boost Mobile’s Irvine headquarters. Rock stars sell the company’s products.
All this, even after Boost Mobile became part of Overland Park, Kan.-based Sprint Nextel Corp. last year.
Reston, Va.-based Nextel Communications Inc., which was bought by Sprint Corp., started Boost Mobile.
Boost Mobile has continued to add hundreds of thousands of customers and grow local operations while maintaining its independence and street cred with America’s kids, said Don Girskis, vice president and general manager, who sounds more like a surfer than a telco at times.
“We’ve got a great culture,” said Girskis, who recently wore flip-flops to work.
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Reaching the audience: ad for Boost-sponsored surfing event |
Still, there have been changes.
Sprint Nextel officials recently said they’ll put the brakes on the number of customers Boost Mobile can take on.
The issue: ensuring enough “spectrum” space for emergency radios to operate. Sprint Nextel wants to reserve that space for its other, bigger units.
The company hasn’t been specific in how much it will pull back on Boost Mobile’s growth. The business still expects healthy sales growth of 50% this year compared to 2005, according to Girskis.
Sprint Nextel doesn’t break out sales for Boost Mobile.
“We’re measuring our growth,” Girskis said. “We have always measured our growth to make sure we’re growing at a reasonable rate.”
Some markets are unhampered by concerns about interference with emergency services radios, Girskis said.
He added it was Nextel that first went to the Federal Communications Commission over concerns about emergency services getting the spectrum space they need.
Boost Mobile enjoys more independence under Sprint Nextel, according to Girskis. In one case, the company has shifted more back-office operations to Boost Mobile.
Growth has been brisk.
Boost Mobile grew from more than 400,000 customers at the end of 2003 to more than 1 million at the end of the following year.
The business has more than doubled its customers to 3.6 million since the Sprint Nextel deal a year ago.
The growth has pushed up worker numbers.
Back in 2002, Boost Mobile had about 35 people, a number that grew to 175 by late summer 2005. Today Boost Mobile has 297 people, a 70% increase from a year ago. The work force should grow to around 330 by the end of the year, Girskis said.
In Orange County, Boost Mobile employs about 184. That should grow to about 205 by year’s end, he said.
To handle new employees, Boost Mobile expanded, adding 20,000 square feet to its existing 27,000 square feet.
The growth has come in the face of some sobering numbers from its parent.
In the past three months, Sprint Nextel’s stock price has dropped about 30%. Much of the decline came after it reported subscriber growth numbers that trailed the other major players by about half, said Michael Voellinger, vice president of wireless services at Pleasanton-based Telwares Communications LLC, which works with companies to pick telecommunications providers.
Still, Boost Mobile did more than its part to increase subscribers.
Overall, Sprint Nextel added 708,000 subscribers. More than half, 498,000, came from Boost Mobile.
A few weeks after the report, chief operating officer Len Lauer stepped down. Gary Forsee remained chief executive.
The executive change doesn’t mean much for Boost Mobile, spokesman Andrew Colley said.
“Gary Forsee … called Don to let him know how pleased he’s been with Boost’s performance, and indicated that Don will be reporting directly to him, as he is not looking to replace Len Lauer,” Colley said. “The net of it is that it’s business as usual for Boost, and Don has a new boss.”
Still, Voellinger said Boost Mobile was more important to Nextel. It’s too small to have a big impact on Sprint Nextel, which has about 60,000 workers.
Boost Mobile has about 50% market share in its target market, Girskis said, despite new competition. Recent rivals include Walt Disney Co.’s mobile phone for kids and ESPN phones for sports fans.
Then there’s a well-funded startup, Amp’d Mobile Inc., a Los Angeles-based company run by one of Boost Mobile’s cofounders, Peter Adderton.
Amp’d Mobile, which used to be based in Aliso Viejo, has lined up more than $100 million in funding, including more than $50 million from Viacom Inc.’s MTV Networks unit.
The startup has caught attention for its commercials that test the boundaries of good taste. It also focuses heavily on entertainment and creating a sort of social network, similar to MySpace.com.
Girskis said he isn’t too concerned.
Boost Mobile is based in the heart of OC, home of surfing and skating, and is a trendsetter for youth around the country, he said.
Workers who never would wear a tie pull “shenanigans” around the office, keeping the company breezy and fun.
Colley pointed to a Boost Mobile commercial with Travis Barker, the drummer for the rock band Blink-182.
“Kids will know who he is,” Colley said.
Most of all, Girskis points to the company’s huge market share, which he says has been creeping up.
Boost Mobile enjoys the benefits of being part of a company with its own networks. Amp’d and Disney must rent space from other wireless networks for their customers.
Girskis said he’s looking to fuel growth with new phone features, such as music players.
A dating service called “Hookt” has been another big hit,a tie-in to the social networking scene,with about 10% of customers now using the service.
Boost Mobile is looking beyond the U.S. for growth as well.
“We are in discussions,” he said, declining to give specifics.
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Commission Votes to Deregulate Landlines
The California Public Utilities Commission late last month voted to deregulate most of the state’s landline phone industry in a move that could reshape how California businesses and residents get and pay for phone services.
The unanimous commission vote set out in a massive 264-page decision allows the state’s four largest wire line phone companies,AT & T; Corp., Verizon Communications Inc., SureWest Communications and Citizens Communications Co.’s Frontier,to set market prices for most of their services, including “bundling” packages.
The decision is in effect.
“Today, California joins 21 states in deregulating its telecommunications market,” Public Utilities Commission member Rachelle Chong said.
Competitors to the wire line phone companies,including cable and Internet phone service companies,set their own voice services rates.
To protect poorer residents, the commissioners agreed to freeze the base rate for residential phone service until Jan. 1, 2009. They ordered the companies to make that basic rate available as a stand-alone item.
The carriers must provide 30 days notice to customers and the commission of any price increases among any of the offered services.
Also, the sharply reduced LifeLine rates for poor households remain in effect pending further PUC review.
In moving to deregulate the land line phone market, the commission cited evidence of high levels of competition within the voice services industry, despite concerns to the contrary from consumer group critics of the proposal.
“The proposed decision finds that the four local telephone companies lack market power in California,” Chong said in a statement accompanying the decision. “We unshackle them from current regulatory chains and free them to price and offer new voice services. Their competitors are not bound by the same regulations, so this levels the playing field between competitors.”
Chong said that the commission will monitor the land line carriers to make sure the pricing of services remains fair.
“We will not regulate where it is not necessary, but we retain full authority to step in if we see market abuses,” she said.
