Boost Mobile Qualitative Positioning Development Research DRAFT - Advance preview copy

Page 2 Contents Background Research Objectives Approach & Methodology Overview/Executive Summary Cellular Phone Category Overview of Key Themes Competitive Landscape and Perceptual Map Category Fundamentals & Expectations A Model for the Ideal Cellular Phone Boost Mobile Brand Associations based on the Boost Mobile name/logo Reactions to presentation of Boost Mobile brand Reactions to Products and Core Features Boost Mobile Brand Position and Personality Summary and Next Steps

Page 3 Research Objectives In preparation for the launch of Boost Mobile in the U.S. market, qualitative research was conducted to guide the positioning of the Boost Mobile brand. Specific objectives included: Understand the competitive landscape General beliefs and attitudes about cellular phones Competitive perceptions [strengths & weaknesses of key brands] Explore the primary motivators within the category Aspirational imagery associated with the category Unique and appealing benefits of the Boost Mobile offering Uncover relevant positioning opportunities for Boost Mobile Based on presentation of the brand using packaging, posters, and product samples Includes feedback on the actual style and features of the product

Page 4 Approach & Methodology Given the nature of the objectives, a qualitative research approach was utilized at this stage of development. This approach allowed for a in-depth exploration of the thoughts, feelings and attitudes of respondents as they relate to the category and to the Boost Mobile brand. Methodology included a combination of: In-Home friendship groups – High School Teens Conducted with high school teens age 15-18, engaging them on their turf and among their friends. This methodology provides a comfortable, open environment that allows them to freely share their thoughts and feelings. On-Campus friendship groups – College Students Conducted with college students age 18-22, engaging them on their turf and among their friends. This methodology provides a comfortable, open environment that allows them to freely share their thoughts and feelings. In-Facility discussion groups – Young Adults Conducted with young adults age 21-24] in an environment that encourages collaboration and an open exchange of ideas.

Page 5 Approach & Methodology A series of 10 qualitative discussion groups were held between April 10th and April 19 in two California markets: Southern California: LA/Venice/Santa Monica 2 Teen In-home sessions [1 male and 1 female] 2 College On-campus sessions [mix of male and female] 1 Young Adult Focus Group [mix of male and female] Northern California: Berkeley/SF 2 Teen In-home sessions [1 male and 1 female] 2 College On-campus sessions [mix of male and female] 1 Young Adult Focus Group [mix of male and female] Respondents were pre-screened to match the following profile: Demographically fit within one of the three core youth segments Currently have a cell phone, or be interested in acquiring one Interested in action sports [surf, skateboard, snowboard, bmx, etc.] Culturally plugged-in: technology, fashion, music, entertainment

Executive Summary

Page 7 Exec Summary Fill in exec summary here…

Cellular Phone Category

Page 9 Cellular Phone Category Cellular phones are an accepted and desirable part of their lives Friends, classmates, parents -- phones are everywhere Respondents had a great deal of knowledge of the category – even among those who have never owned a cell phone Familiar with the terminology Sim cards, SMS, GSM, etc. Aware of all the major players Service providers: AT&T, Verizon, Cingular, Sprint, Nextel Phone makers: Nokia, Motorola, Ericsson, Audiovox, Panasonic, Samsung Note: VoiceStream, Virgin Mobile were not mentioned in any session Familiar with most of the advertising, especially for Cingular, Sprint, Verizon, and m-Life No brands were currently making a connection with their lives Opportunity for a relevant youth-oriented brand in this category

Page 10 Cellular Category: Perceptual Map New/ Emerging Old/ Established For BusinessFor EveryoneFor Youth Youth Opportunity

Page 11 Key Competitors Nokia Vast street presence makes Nokia appear to be the most common (and popular) phone Easy to customize accessories (with changeable faceplates) made Nokia a favorite with many females Perceived as trendy and the youngest brand Driven by their small cute phones, colors, games Nokia was too young and too small for some, kiddie phones Cingular Known for offering inexpensive plans and free phones Made Cingular a popular choice among respondent Brand persona was more friendly and fun Often criticized for having poor service quality

Page 12 Boost Mobile Partners Motorola A reputation for making high quality, expensive phones that are primarily for business professionals Recognized as the original – but no longer the cutting edge leader Many remembered the Star-Tac phones, flip phones Heritage with Walkie-Talkies (sporty, rugged) and pagers was viewed as a positive, especially among teens Emerging youth appeal and street credibility from Hip-Hop associations [Jay Z, I just wanna love you (Give it to me)] Nextel Viewed as being exclusively for businesses, corporations, including blue collar jobs Nextel was perceived as having quality service, state-of-the art Strong association with 2-way radio feature [Direct Connect] Many associated Nextel with Motorola

Page 13 Dynamics of Service Plans Two primary factors dominated perceptions and satisfaction with service providers: Service quality Poor service, weak signal strength caused issues Expensive pricing – often due to confusing and misleading plans: Hidden extra charges Not enough usable minutes Gouging for going over the minutes included in the plan Anytime vs. night/weekend minutes When does night begin Billing for full minutes Problems with plans The perfect plan would include: Free incoming calls Free first minute Free Mobile-to-Mobile Unlimited nights/weekends Flat fee pricing for unlimited use Accurate status of minutes used Less concerned with Free Long Distance / No roaming Especially teens, who have a smaller zone of life More simple & more honest plans

Page 14 Pre-Paid Opportunity Idea of Pre-Paid – the simplicity of pay-as-you-go – was intriguing The concept of buying minutes was a refreshing alternative to conventional plans Teens found Pre-Paid especially appealing – as a way to get a phone without credit – but more importantly, without permission However, Pre-Paid was far from a perfect solution… Pre-paid minutes are perceived as overly expensive [like calling cards] What is the actual cost per minute? What is in the fine print? Connection to disposable phones [cheap, crappy phones] Many expressed concern over running out of minutes Expected to find additional minutes at any store, 7-11, gas stations, etc. In the end, Pre-Paid was NOT truly a viable solution Utilizing Pre-Paid to avoid financial pain meant using the phone less -- which actually defeats the purpose of having a phone

Page 15 Cell Phone Imagery & Associations Respondents clearly recognized the pragmatic benefits associated with having a cell phone Staying in Contact Going Places Emergencies

Page 16 Cell Phone Imagery & Associations Several negative aspects were immediately associated with cell phones Frustrations Too Expensive! Doesnt Work Everywhere

Page 17 Cell Phone Imagery & Associations The strongest associations showed why cell phones are a desirable and important part of their social life Chillin with Friends Hooking Up with Parties Not Missing Out on the Action

Page 18 Cell Phone Imagery & Associations A Security Blanket [Confident, Free, Relaxed] A Safety Net [Do More, Take Chances, Get Crazy]

Page 19 Cell Phone Imagery & Associations Fashion Statement More Than A Phone Getting Noticed

Page 20 The Ideal Cell Phone The ideal cell phone for this target includes the optimal combination of: Function: Works flawlessly as a phone Features: Expected basic features Form / Fashion: The style, look and feel Fun: Bonus extras Future: Ideal features to come FUNCTION FEATURES FORM / FASHION FUN FUTURE

Page 21 The Ideal Cell Phone FUNCTION The top priority was having a phone that always worked This meant getting good service no matter where you are – indoors or outdoors Perceptions of Nextel having superior service will provide a strong benefit for Boost Mobile FEATURES Phone was expected to have a core set of standard features Voic Text Messaging Customizable Ring TonesClock / Alarm Calendar / DatebookPhone Book Vibrate modeCaller ID

Page 22 The Ideal Cell Phone FORM / FASHION Size, Style, Accessories (especially for girls) Sleek, modern looking Especially for young adults, who did not want a phone that looked like a toy Metallic – silver, chrome, platinum – or black Clear, see-thru (like the popular iMac designs) Colored lights Compact Flip-style - small (pocket size), but so small that it is fragile Preferred styles also had an internal antennae Customizable faceplates: colors, patterns, images Especially appealing with females, who were more interested in accessorizing their phones

Page 23 The Ideal Cell Phone FUN Bonus extras features used primarily for killing time Games! Captured everyones imagination (even if they claimed to not play) Snake is a universal favorite, Tetris would be great Color screens… enhanced the game playing experience Web services, information Voice commands [a novelty feature] Horoscopes, Bio-rhythms, Magic 8 Ball FUTURE Ideal features to come [can be evidence of the brand attitude] Music via the phone was clearly the leading idea [MP3 & radio] Real music for ring tones Cameras, video – sending pictures GPS – built-in navigation system

Boost Mobile Brand

Page 25 Boost Mobile: Brand Associations Based only on the presentation of the name and logo, Boost Mobile was very well received and elicited many positive associations An appealing company, unlike other phone companies Unaided associations with surf, skate, and shoe brands Active Sporty Youthful Young Energy Amplifier Speed New Refreshing Hip

Page 26 Associations with Action Sports Presenting Boost Mobile in the context of these sports confirmed that the brand is for a younger crowd Further distanced Boost Mobile from others in the category Association with established brands [Billabong, Quicksilver] provided an element of credibility and belonging in this environment Respondents could see potential in co-branded accessories from these brands, and others Volcom, Oakley, Baby Phat Though disconnected from sports in that people dont use cell phones while doing those activities, these associations created expectations of the product Rugged, durable phones Water-proof (or water-resistant) Relevant features and content (such as surfline.com)

Page 27 Associations with Action Sports However, acceptance was not universal: Action sports and Team Riders were especially appealing in southern California Lifestyle is part of the overall culture A greater sense of personal identification Respondents in northern California were less captivated by this expression of the brand Recognized the intention and associations, but less willing to embrace the imagery More likely to see this approach as cliché, or worse, trying too hard to be appealing to young people Action sports imagery for the brand was seen as being very narrow in appeal Relevant to a small group or sub-culture Also perceived to be lacking diversity

Page 28 Boost Mobile Product: Features The product features nailed it! Fully loaded phones had everything they expected and more. Unbelievable games Set the standard for games on phones Immediately hooked people in Open to downloading, buy paying was a question mark Led to concerns about battery life and memory 2-Way Radios Buck a day concept for unlimited use made sense Should be free (like walkie-talkies), why pay to use a feature Speaker phone Web services Most compelling with relevant, credible content Stigma of being slow caused skepticism Text messaging was valued by students (who use it in class)

Page 29 i55 Overall reactions to the i55: A perfectly acceptable basic phone With all the features, most expected to pay around $100 Some saw the i55 as being comparable to free phones Style, while not exactly a good fit with their ideal, did fit well with the brand concept Young, fun, durable looking phones Silver was the standout favorite of the i55 models Blue backlight was especially well liked Other colors received a mix reaction Pink: Dismissed as too teeny girl and two-tone shade Green: To some, the green felt dated [like the 80s neon. Body Glove]

Page 30 Boost Mobile: Product Issues Concerns and criticism of the i55 phone: Size of i55: too thick and bulky, a bit too big as well Antennae felt cheap and unnecessary Button color: red button stood out, but not aesthetically pleasing Navigation button on i55 - difficult to use Layout of buttons caused some difficulty in navigating Specifically the buttons for select and exit Unclear terminology Java apps J2ME iDEN PPT Buss Button

Page 31 i60 Overall reactions to the i60: Flip phone style was well liked More compact design was an improvement over the i55 No caller ID info on outside Available only in black, the lack of flashy style and extra features (compared to the i90) made the additional cost hard to justify Note: Of all the demo phones, the i60 was the least developed in terms of feeling like an actual finished product.

Page 32 i90 Features feedback Flip phone design, along with the silver and clear colors, made the i90 the clear style leader Color screen was seen as an outstanding features -- especially for playing games -- putting the i90 in a class of its own LCD Color Display text was unnecessary Called ID screen on the outside was praised Extra lights on clear version were a favorite of many younger males Screen saver images, animation of numbers when dialing was very captivating Overall, hard to justify additional cost -- Is it worth it? Can I afford it?

Page 33 Boost Mobile: Brand Position Extreme, Action Sports positioning creates challenges for the brand Clearly a brand that is not for everyone Not be like everyone else is positive Not being universal by nature will exclude certain people, potentially limiting the appeal of the brand Must be genuine, authentic -- or you risk losing even the hardcore Using these sports in mass advertising is most susceptible to being sees as exploitation – action sports are known as being non-commercial Tell the Boost story (supporting the sports) can help by revealing the depth of Boost Mobiles involvement Opportunity on packaging to tell more of the story

Page 34 Boost Mobile: Brand Position Position against the underlying spirit and attitude of the sports The attitude is more compelling than the activity Attitude is consistent with the action sports, letting the association live in on in promotions, sponsorships, niche marketing efforts Freedom No limits, no rules, no restrictions No permission required Individuality Your way, Do your own thing, Not mainstream Australian Different, Break the rules, hardcore, outdoors, free spirits

Page 35 Boost Mobile: Personality/Attitude Several distinct personality profiles emerged from the current presentation of the brand Adopting the right tone and attitude can help provide a link being mainstream marketing efforts and niche (action sports) marketing Laid back, casual A relaxed, carefree attitude that captures the life attitude of the youth target, while also connecting with the easy going beach spirit Aggressive, Defiant The stereotype of most X-sports Can reflect the spirit of not being like every other brand in the category Energized, Spirited, Adrenaline Reflects a universal life spirit common to many in this target group An experiemental, take on the world attitude

Page 36 Summary Conclusions Next Steps

For additional information, please contact: Alternate Routes, Inc. 531 Main Street #100 El Segundo, CA Mike Zarneke, Partner Alternate Routes, Inc cell main fax