Category: Telecom

Prepaid Wireless Competition Heats Up

Prepaid Growth

Prepaid wireless and no-contract mobile services continue to grow in popularity. Forecasts indicate this trend shows no signs of slowing down. Even major providers like Verizon have embraced prepaid plans. Prepaid customers, who typically bought less pricey phones upfront, generally were provided slower data services. But that’s changing. In the past prepaid customers generally were provided slower data services. Roger Entner, chief analyst at consulting firm Recon Analytics explains that “prepaid users are getting more 4G data at cheaper rates than ever. When you look at the fighter brands (Cricket and MetroPCS, the most aggressive), you see the old days of prepaid being more expensive (per megabyte) than postpaid are gone.”

Getting Customers To Switch

At any given time, over 25 million people in the U.S. are planning on changing their wireless provider. That presents both a challenge and an opportunity for carriers that want to keep their current customers but also add new ones. Since prepaid wireless customers aren’t under any contract, the opportunity to get them to switch carriers any given month is constant.  T-Mobile CEO John Legere has indicated that he expects the prepaid battle to heat up.

“We’re killing it in prepaid,” Legere said. “The majority of our growth is on MetroPCS, as opposed to our other brands.”

Prepaid Wireless Marketing

In the past providers drew distinct lines between their prepaid and postpaid customer segments. Marketing lines have now blurred, analysts say. Many prepaid plans renew automatically every month. Phone financing plans still lock in postpaid subscribers, but it’s easier for consumers to exit deals. Marketing priorities are now aligning with trends showing prepaid growing at a rapid pace. In 2016 the big four U.S. carriers added about 2 million net prepaid subscribers over the first nine months of the year, translating into year-over-year growth of about 70%. In comparison, postpaid subscriber growth slowed down by 30% year-over-year during the same period. Winning the prepaid market is now a key to growth for any wireless carrier.

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