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Virgin Mobile Jumps on Flat-Rate Bandwagon

Virgin Mobile is the latest wireless carrier to offer up a lower-priced unlimited talk-rate plan.

The $79.99 monthly flat-rate plan, announced yesterday and called "Totally Unlimited," is a competitive response by the pay-as-you-go provider to unlimited rate plans launched earlier this year by market leaders.

One industry watcher said the new plan could spur carriers to further reduce the cost of plans given the competition in mobile services.

"This is definitely a tit for tat move as it will make other carriers look at their rate plans again," Carmi Levy, senior VP, strategic consulting, AR Communications, told InternetNews.com.

Price point is a key competitive element in today's wireless services race. Customers and businesses want better telecom cost efficiencies given the increasing use of smartphones and mobile services.

On the day of the announcement, shares of Virgin Mobile shares dropped 15 percent. By late afternoon today, the stock price had regained 5.5 percent.

In mid-February, AT&T (NYSE: T), Verizon Wireless and T-Mobile ignited a pricing battle when all three announced fixed-price unlimited calling plans for $99.99. T-Mobile even added unlimited texting.

Sprint then bested those deals by offering unlimited voice, data, text, e-mail, Web access, GPS service, as well as TV, music, Direct Connect and Group Connect options in one plan at the same rate.

The Virgin Mobile model of providing pay-as-you-go devices may also grab greater customer attention, Levy said, as small and midsize businesses are weary of managing overhead costs such as subscription contracts and mobile expense reports.

"The ability to hand that off to employees in terms of managing their phone costs is appealing and streamlines expense and reimbursement, as you just have the monthly charge to deal with," Levy explained.

According to Bob Stohrer, chief marketing officer of Virgin Mobile, wireless users don't need a contract to get good wireless value.

"It is simply not necessary to sign a two-year contract to get real worth with your wireless plan," Stohrer said in a statement. The rate plans announced earlier this year by AT&T, Verizon and T-Mobile required two-year contracts.