Wireless Phone Plans - Prepaid Or Postpaid?
Consumers are abandoning traditional subscription plans which may curb growth for AT&T Verizon Wireless Sprint & prepaid T Mobile phones.
AT&T T the biggest U.S. phone company in January reported a respectable 13.2% increase in fourth-quarter wireless sales fueled by strong subscriber gains. Surveys showed consumers would rather reduce purchases even of food & clothing before ditching cell phones.
Fresh survey data show that U.S. consumers are rapidly switching to cheaper calling plans often choosing so-called prepaid packages that give carriers smaller less predictable revenue streams.
On Mar. 19 Washington think tank New Millennium Research Council NMRC released results of a survey showing that 17% of Americans have already switched from contract-based plans to cheaper prepaid services in the past six months due to concerns about their jobs & the recession. Those sticking with contracts are migrating to cheaper plans & cutting such extras as texting & e-mail. “Millions of Americans are on the verge of discontinuing expensive cell-phone plans,” says Graham Hueber a senior researcher at the Opinion Research Corp. which conducted the study commissioned by the NMRC.
Fewer Minutes Less Texting
Other evidence also suggests consumers are taking a closer look at their wireless bills. Of 2,151 U.S. cell-phone users surveyed online by JupiterResearch in November one-third were considering cutting back on wireless spending & the number of minutes & texts they use. In February Sprint Nextel S indicated that “economic uncertainty” was partly to blame for a sales decline & customer losses in the fourth quarter.
One maker of air cards Sierra Wireless SW announced on Jan. 29 it would lay off 10% of its workforce amid a drop in fourth-quarter revenue. “Despite the economic environment we grew revenues in 2008 & I expect 2009 will be another year of overall revenue growth & solid progress for our company,” AT&T Chief Executive Randall Stephenson said during the company’s January earnings call. Of U.S. consumers who have wireless contracts almost 40% or 60.3 million are likely to curtail cell-phone spending to save money if the economy worsens in the next six months according to the NMRC survey. Many already are scaling back on data cards for computers which according to wireless industry consultant Chetan Sharma contribute about 12% of carriers’ data revenue.
Even smartphone users typically among the most profitable customers may soon trim usage. As professionals in finance & other industries continue to lose jobs Sharma estimates that 10% to 20% of the people who own these souped-up Web-surfing phones may downsize plans this year.
Smartphone users typically pay $70 to $200 a month for wireless service. As they reduce spending U.S. wireless data revenue may grow only 15% this year vs. 38% in 2008 Sharma estimates.
Carriers that specialize in prepaid calling may be among the few beneficiaries of cutbacks. Now only about 15% of Americans use prepaid wireless plans which can cost 50% to 75% less than contract-based plans. In contrast 68% of Britons already use prepaid plans. “Thanks to the recession the U.S. marketplace is undergoing fundamental changes.” Indeed prepaid may grow to 20% of the market by yearend Sharma estimates. In the fourth quarter prepaid customers accounted for 57% of new subscribers at T-Mobile USA up from 23% a year earlier.
Widespread Defections
Some consumers are leaving the four largest carriers—AT&T Verizon Wireless Sprint & T-Mobile—for smaller prepaid carriers. In the fourth quarter MetroPCS PCS saw net subscriber additions surge 74% to 519,519 from a year earlier. In the same quarter Sprint Nextel lost 1.3 million customers most of them postpaid. Sprint executives are hopeful that the industry will nevertheless fare better than other areas of the economy. Providers of prepaid calling typically considered the domain of younger callers or those with bad credit are taking steps to make their plans more alluring by adding features & better phones. Such services as MetroPCS & Leap LEAP are available in more markets. On Mar. 9 Leap expanded into Philadelphia. Nowadays users can purchase not only voice but also data plans that permit texting & e-mail.
And prepaid phones have turned from clunky to cool. On Mar. 10 MetroPCS introduced Research In Motion’s RIMM BlackBerry Curve 8330 smartphone which features a Qwerty keyboard & rich multimedia capabilities in many of its markets. For only $50 a month without a contract users of the device can talk text browse the Web & send multimedia messages & e-mail. Steps like that are helping foster loyalty. Developing War in Price Cutting?
Contract carriers are responding by updating & rolling out new prepaid plans & lowering prices. This year T-Mobile USA began offering a $50-a-month unlimited voice plan to longtime subscribers to prevent them from leaving.
But the recent flurry of cheaper unlimited plans from T-Mobile Boost Mobile Alltel & Zer01 Mobile raises a red flag for Sanford C. Bernstein analyst Craig Moffett. “As growth slows pricing [war] risk rises,” he wrote in a recent report. As more carriers start offering unlimited voice calling & data plans they increasingly will have to compete on price.
The Best Cell Phone Plans Vary According to The Amount Of Calls You Make. Find Out If A Prepaid or Postpaid Plan Is The Right One For You.
Before buying the first prepaid or postpaid plan you see it’s better to first find out about the different cell phone plans available. When looking at cell phone plans you will also want to consider the amount of coverage you will get. It is important to know whether the prepaid or postpaid plan that you’re signing up for is local regional or for nationwide coverage. Take note that the cell phone plans with the best values are the ones that include free long distance calls.
A family plan is also an option when shopping for a cell phone plan. What’s great about postpaid packages like these is that you’ll be able to make free inter-network calling so you won’t have to pay to talk to your family members.
If you are still unsure of which postpaid plan to get after reviewing the various cell phone plans available then you might want to consider the prepaid option. The prepaid plan is best if you don’t have a consistent usage every month. If you are unhappy about the prepaid plan at any time you can terminate the prepaid plan without any hassles
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