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

Posted: , 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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