Prepaid wireless has come of age. It began in the US with TracFone nearly ten years ago, followed by Virgin and Boost. Then metroPCS and CricKet began offering pay-up-front low-cost monthly plans in a growing number of markets. Four years ago, new Prepaid customer additions were less than one-third of Postpaid adds. This year, the tables have turned, and for the first time, US mobile operators will add more Prepaid customers than Postpaid. Just today, Sprint reported losing 1.3 million Postpaid customers, while gaining 764,000 Prepaid customers with its Boost Unlimited offering.
Prepaid plans have evolved from pay-as-you-go minutes, to buying service for a day, week or month, to the current crop of unlimited voice, messaging and data plans. Prepaid prices have gone from being relatively expensive on a per minute basis to potentially great values, for low usage and especially for unlimited usage.
In fact, today Postpaid (or Contract) and Prepaid (No Contract) plans may be more aptly described as Premium and Value plans, respectively. Price checks over the weekend illustrate the point:
PREMIUM: Unlimited voice, messaging and data on Postpaid/Contract plans:
- AT&T and VZW: $129.99/month
- T-Mobile, $109.98/month
- Sprint $99.99/month
- Contract “activation fees” plus early termination fees up to $200
VALUE: Unlimited voice, messaging and data on Prepaid/No Contract plans:
- Boost Unlimited: $50 (also includes “walkie-talkie”)
- CricKet: $50/month (includes 30 roaming mins)
- Virgin Mobile: $59.99/month (includes 50MB data)
- metroPCS: $45/month
- No contract activation and no early termination fees
From the customer’s perspective, for the Premium unlimited plans above, you pay an “activation fee” so that you can sign a two-year contract (with hefty early termination fees), and then you have the privilege of paying at least twice as much a month for service than you would without a contract.
The biggest difference between the two offerings is the type of handsets available (and whether your first payment is at the beginning of the month or the end; after the first payment, you pay monthly either way.) If you don’t care whether you carry an iPhone, the latest BlackBerry or other smartphone, more and more people are turning to the value of Prepaid. (Interestingly, metroPCS is introducing a BlackBerry, CricKet offers PC data cards, and a great range of feature phones are offered by Prepaid providers so that any handset disparity is also disappearing.)
There are other Value services, to be sure, many offered by regional and independent operators who compete with National Operators in their local markets. And there are great services like Jitterbug that have attractive plans for lower-usage subscribers. Verizon, AT&T and T-Mobile have their own Prepaid offerings, but the Value service providers above offer very compelling plans.
I have written on unlimited plans and continue to believe that most people don’t need $100+ unlimited voice plans. Most will do better with lower-priced bucket plans, such as the typical entry-level $39.95/month plans that most Contract customers use.
A final thought: The two largest National Operators — VZW (including ALLTEL) and AT&T — who together ended last year with nearly two-thirds of total subscribers on the National Operators’ networks, have the most expensive unlimited plans. This could change as those competing with VZW and AT&T are offering compelling alternatives.
NOTE: I took a few months off from my Blog, but am back. Thanks, Ian!
