Boost Mobile CEO Steps down, mad at Nextel

[orion007]

I just report the news...sorry if this is a repost. Looks like Nextel is gonna try a screw up Boost. CEO wanted to go nationwide but Nextel didn't.

IRVINE, Calif. (PRNewswire) - IRVINE, Calif., Nov. 24 /PRNewswire/ -- Peter Adderton, the driving force behind Nextel Communications' entry into the youth cell phone market, has left the company in a disagreement over strategy and direction and the failure of Nextel to keep promises made to him.

Adderton, 36, was founder and CEO of Boost Mobile LLC, the Australian-born company that sells Nextel service using calling plans, features and cell phones designed specifically for young consumers. Nextel purchased a majority stake in Boost from its Australian founders in August 2002 in what was widely seen as a bold initiative by the nation's fifth largest wireless company to branch out from its business base to penetrate a largely untapped consumer segment. Nextel bought the balance of Boost's equity earlier this year.

Adderton said he told Nextel CEO Timothy M. Donahue during a meeting Sunday he believes the company and several senior officers have failed to live up to promises made when Nextel completed its purchase of Boost this past August.

"When Nextel bought our company, it was made clear to me that Boost would continue to operate independently and that our job was to build a brand that could dominate the youth wireless market," Adderton said. "Instead, they're trying to turn us into Nextel in jeans. Every day, Nextel reins us in a little more and makes us increasingly corporate. That's completely incompatible with what we're trying to accomplish."

When the Nextel-Boost joint venture was announced, analysts praised it, with one saying "Boost Mobile has demonstrated an ability to understand what makes Generation Y tick." Nextel Executive Vice President and COO Tom Kelly said the company had selected Boost because "one of the key requirements for the market is that it has to truly be an accepted brand by youth, and on their terms." Kelly said Boost's management team had "unparalleled expertise in developing wireless offerings that are uniquely suited to the lifestyle and behaviors of young people."

"To build a youth-oriented brand, you have to be immersed in youth culture," Adderton said. "Since Nextel doesn't get that and doesn't want to operate that way, I just want to take Boost back and run it myself in the way I know will work."

Adderton said he believes Nextel's failure to roll out the Boost brand nationwide and decisions made by Nextel management to impose Nextel's corporate culture on Boost were taking the company in the wrong direction.

Adderton founded Boost Mobile in Australia and New Zealand in 1999, and it remains an independent company in those countries with him as CEO and major shareholder. The company has had success targeting young consumers through its association with surfing, skateboarding and extreme sports. Not only is Boost a major sponsor of those types of competitions, but its phones are sold in surf shops and other retailers, such as Sam Goody stores, with youth clienteles. Among its phone offerings is one with Quicksilver's Roxy brand. Another phone with the Quicksilver brand is scheduled for launch next year. In test markets in California and Nevada, Boost has signed up more than 250,000 subscribers, principally through pay-as-you-go plans that appeal to young consumers.

About Boost Mobile

Boost Mobile LLC is a lifestyle-based telecommunications company that focuses solely on developing and distributing communications products for the youth market. The company offers pay-as-you-go wireless phone and entertainment services available in California and Nevada, which are designed to meet the lifestyle needs of today's active youth.

[DigitalJEM]

Damn Nextel.. Quit being stupid and let Boost go NationWide.. Do the right thing damn it.

[leo777]

what other stupid decisions is nextel going to make .I am sorry to say this but if nextel gets eaten by BIGGER SHARCKS it has been just a matter of time and EXCELLENT IF THEY DO!!!!!!!!!!!!

[LuieB]

That sucks, but did I hear a quicksilver phone? Nice.

[fiqtir]

Nextel will take Boost nationwide if and only if the financials make sense. If it is determined that Boost is a financially beneficial proposition, I'm sure Nextel will take it nationwide. There are a lot of things to look at before you make a decision of that magnitude.

[br0nx finest]

Originally posted by leo777
what other stupid decisions is nextel going to make .I am sorry to say this but if nextel gets eaten by BIGGER SHARCKS it has been just a matter of time and EXCELLENT IF THEY DO!!!!!!!!!!!!

Nextel=Ghey.
OR
Nextel>Hitler (Simple reference to communism).

I'm looking seriously to switch to Sprint OR T-Mo (Please spare your biased comments).

[SuperH]

Its really sad when one business makes another businesses CEO step down. Way to go Nextel

It sounds like Nextel, knowing they can have complete control over Boost LLC (USA) feels the need to exercise that right, while disregarding the original business model. Its all about how the "figures" look to Nextel in their own strategy. Apparently, they see more profitability with their own strategy, probably through their extreme fetish with contracts.

I have a friend who supposedly signed a one-year service agreement, however Nextel said he couldn't cancel (the cellular service sucked where he was at) because he was signed for two years. He attempted to argue this claim, got fed up, paid the termination agreement and stomped his yellow i700 to bits as soon as he got off of it with Nextel.

I agree; it would be better for young consumers to have NationWide Boost. Once they have enough money and find they are satisfied with the service, they're more likely to go with the "full" Nextel. Not everyone, especially teenagers, can afford a $500 deposit because of insufficient credit history (no credit), however they can still afford to have some kind of communication device.

[fiqtir]

SuperH,

You bring up a good point about Boost feeding "full" Nextel down the line when the users credit is established. That's one of the main reasons Nextel stated to support the joint venture. But when it comes down to it, Nextel has to make sure the Boost Pricing won't cause a move from "full" Nextel to Boost.

$1.00/day for unlimited DC, if used prudently will severely undercut Nextel's monthly fee for Unlimited DC. That may be the biggest barrier to Boost going Nationwide. Southern Linc's pricing of $1.50/day is a much more financially reasonable number, from the carrier's perspective.

Keep in mind, companies want to launch products that will grow their business profitably, not canabalize their business.

[DigitalJEM]

Originally posted by nextelchad
nextel is coming out with there own pre paid service at the end of the yr boost wasnt going nationwide tell march anyway. i was at a show a while ago and i talked to a nextel rep and i was told that they were going to start there own pre paid service away from boost.

I highly doubt that. They wouldn't have paid so much for the investment in Boost in the first place if they were going to come out with their own. They might convert Boost, but I highly doubt they're going to go create their own entire system (all over again).

Originally posted by fiqtir
SuperH,

You bring up a good point about Boost feeding "full" Nextel down the line when the users credit is established. That's one of the main reasons Nextel stated to support the joint venture. But when it comes down to it, Nextel has to make sure the Boost Pricing won't cause a move from "full" Nextel to Boost.

$1.00/day for unlimited DC, if used prudently will severely undercut Nextel's monthly fee for Unlimited DC. That may be the biggest barrier to Boost going Nationwide. Southern Linc's pricing of $1.50/day is a much more financially reasonable number, from the carrier's perspective.

Keep in mind, companies want to launch products that will grow their business profitably, not canabalize their business.

If I'm not mistaken, SoLinc's Recharge service is $1.50/day for unlimited NW direct connect. They don't give you the option to use local only DC. If you use DC at all on their system it's 1.50/day.. if you use it local or nw doesn't matter.. it's the same price every day for unlimited usage.

[scbysnx]

I'm glad they weren't able to screw up the australian boost... thats pretty backstabbing they let this guy come in made him promisses didn't keep them and then come out with their own pre-paid. that is really underhanded and low

[Gish]

Originally posted by DigitalJEM
If I'm not mistaken, SoLinc's Recharge service is $1.50/day for unlimited NW direct connect. They don't give you the option to use local only DC. If you use DC at all on their system it's 1.50/day.. if you use it local or nw doesn't matter.. it's the same price every day for unlimited usage.

I thought SoLinc's DC was restricted to SoLinc's network only. Yes it is unlimited DC but it sure isn't nationwide.

[Next Steps]

I think another reason Nextel is holding off on Nationwide boost is because they dont want people using boost phones as upgrades. People use unlocked boost phones a lot now, imagine when it goes nationwide. Nextel will lose their contracts and upgrade fees. You know they don't want that to happen.

[carlthered]

I had heard as well that Nextel plans to offer Nextel Branded pay-as-you go service as well. As a matter of fact, FDT has codes for 64k and 128k pay-as-you-go SIMs. Perhaps Nextel will keep boost targeted at the youth market, and offer its own pay-as-you-go system for the adult market?

Carl

[Qumahlin]

Originally posted by nextelchad
nextel is coming out with there own pre paid service at the end of the yr boost wasnt going nationwide tell march anyway. i was at a show a while ago and i talked to a nextel rep and i was told that they were going to start there own pre paid service away from boost.

Um Nextel now owns 100% of Boost USA....why would they buy it, then scrap it

[CBXweb]

I couldnt understand why Boost Mobile would be a finicial risk if it went nationwide. Here in Southeren California, alot of teenagers espicially black teens have a Boost Mobile. If you go to school, all you here is obnoxious kids with there "chirps" saying "Where you at?"Trust me, if 3 out of 5 cell phones at my school are Boost Mobile, I doubt it will fail going nationwide.