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Are we witnessing the transfer of power to the prepaid market?

Posted: , by John V.

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Are we witnessing the transfer of power to the prepaid market?
There are analysts out there that questions whether or not we're out of the economic downturn that has plagued the entire world for the better part of the last couple of years. With a glimmer of hope, there are small signs everywhere that point to the telling truth that we're slowly moving forward and getting ourselves out of the pit of despair. Unfortunately, the wireless industry has taken its fair share of blows caused by the ailing economy as postpaid wireless growth has seen a dramatic decline of late.

After the top two wireless carriers in the country reported steep declines in postpaid customer acquisitions during Q1 2010, there are many fingers pointing to the poor showcasing in the latest quarterly reports. From the looks of it, AT&T added 512,000 customers under contract which is down 43 percent for the same period last year while their closest rival in Verizon only reported adding 423,000 customers under their belt. For Big Red, the latest figure shows that they are down 55 percent from the same time period a year ago. So who or what is it that's taking away all of the customers out of the voracious appetite from the premier domestic wireless providers?

Interestingly enough, you only need to watch TV as we've witnessed the huge explosion in prepaid advertisements. Analysts are now seeing the most growth in the wireless industry stemming from pay-as-you-go or prepaid which attracts customers thanks to their competitive plan offerings and affordable lineup of phones. Craig Moffett, an analyst with Bernstein Research said, “The postpaid wireless industry is hitting a brick wall. In the absence of the iPhone, AT&T’s wireless business would have shrunk. There is an obvious question being raised. Where are these companies going to turn for growth?”

There is still that huge attraction that smartphones like the Apple iPhone and Motorola DROID have to offer for customers, but some argue that their seemingly unbreakable shields may soon come crashing down in the wake of competition from the prepaid market. When we look back a couple years ago, the phone offerings weren't the best as basic phones mostly littered the lineups of prepaid carriers. Fast forward to the present day, we're seeing more and more smartphones begin to enter the lineups and even premier offerings such as Android are about to infiltrate the market – which ultimately strengthens the union for no-contract providers. Finally, the competitive nature of the prepaid market is clearly taking its toll on postpaid carriers as they keep setting the pace for the all-you-can-eat plans they heavily advertise.

source: The NY Times

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posted on 20 Oct 2010, 01:46

1. Shsadowcell (Posts: 1; Member since: 27 Apr 2010)


Prepaids are the way to go for mobile calling when you have a landline @ home. I on the other hand do not and I use my mobile as a primary use for communication.

posted on 27 Apr 2010, 13:21

2. numberonenygfan (Posts: 211; Member since: 19 Oct 2009)


then you sir fall into the 5 percent of americans who never leave their house and dont really talk to anyone.. then again you might live in a cave.. or a bucket somewhere... because landline companies are having a lot of trouble keeping customers the only reason why the stupid pre paid community has a lot of choices is because of the economy and people who cant pass a credit check with att or verizon. other then that no one would ever use a pre paid phone or a landline for that matter!!! when the industry lostens up and the economy gets better pre paid will be marketed for blue heads and bums. period.

posted on 30 Apr 2010, 10:07

5. CarrieB (Posts: 1; Member since: 30 Apr 2010)


Actually, I tend to differ. Have you noticed that prepaid plans are actually CHEAPER than postpaid now? People might be switching to prepaid now because of the economy but as to switching back once they're more secure? No way! The nature of humans is to get used to things and people WILL get used to paying less and not being tied up in a contract. They will NOT easily go back to contract phones once they get used to paying less for their cell phones. Hey, I use NET10 (prepaid) as service provider and I won't even look at contracts now, knowing that they are all more expensive. Plus they have that whole hidden charges trip going that used to annoy me to no end. This article is only one of many that I've seen the last few months that point to prepaid becoming more mainline and contracts becoming less popular.

posted on 27 Apr 2010, 20:25

3. wade1968 (Posts: 224; Member since: 12 Apr 2010)


ok as for credit i can get a phone on all the major carriers so thats not why pre paid is more tempting to me the price is more tempting pre paid 45 to 60 a month for all your phone calls all your texts messages and unlimited data so in my case to cut my monthly cell phone bill is all about economics try all the major carriers and see what they charge for what you can get with pre paid. if you personally could take your monthly phone bill and cut it by 50 percent or more why wouldnt you. unless your filthy rich. i'll make this point if unlocked phones could be used on pre paid like the nexus 1, htc evo, and hd2 even the Iphone alot of customers would go pre paid. i see this as customers going were tired of giant monthly bills.i would rather spend more on a cool phone to get my phone bill down

posted on 27 Apr 2010, 20:58

4. tuminatr (Posts: 638; Member since: 23 Feb 2009)


Well it’s either that or the economy is finally catching up with the cellular companies. You know it would be more interesting if you could have shown the sales figures for the major prepay companies q1 2009 vs q1 2010 and if they had a huge increase on the prepay side then your right if they did not have a huge increase then it’s a bad economy

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