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Prepaid space hot with competition: Carriers pulling out all the tricks

Once considered the red-headed stepchild of wireless, prepaid services are finally gaining mainstream appeal helped by the need for carriers to target broader demographics and consumer desires for more ways to control their spending.
Over the past several weeks a number of operators have re-jiggered their offerings in an attempt to attract more customers and hopefully fatten the bottom line.
Earlier this month, Leap Wireless International Inc. threw out its often-overlooked Jump prepaid service like an old pair of sneakers to try on its new PayGo offering. The new service trades in Jump’s per-minute charges for an unlimited, per-day offering that varies according to the extra features a customer chooses. The plans include a $1 per-day option providing unlimited local calling, voicemail, caller ID and three-way calling; a $2-per day price that adds unlimited text and picture messaging to the unlimited local calls; and a $3 daily option that features unlimited U.S. long distance, international texting to more than 100 countries, mobile Web and directory assistance, alongside the options of the $1 and $2 offerings.
Boost Mobile, Sprint Nextel Corp.’s wholly owned prepaid division, also forced its pay-as-you-go basic plan to shed a few pounds, launching a new flat rate of 10 cents per minute for all calls, day or night.
Besides recent makeovers, there are other various prepaid offerings. With a shoe box of carriers and an even bigger closet of offerings, it’s hard to know what to pick. Virgin Mobile USA Inc., probably one of the best-known prepaid mobile virtual network operators, offers a 20 cent per-minute basic rate or a 10 cent per-minute price for $7 per month.

“Light talkers”
Tracfone Wireless Inc. subsidiary Net10 offers its prepaid services for 10 cents per minute. U.S. Cellular Corp. targets what it calls “light talkers” with its prepaid service that charges a $6 monthly access fee for 15-cent-per-minute calling or 10 cents per minute for a $10 per-month fee.
This “light-talker” specification is exactly what Bill Ho, analyst for Current Analysis, said prepaid services are all about. Ho divided prepaid customers into three segments: light talkers, moderate talkers and heavy talkers. Light talkers go for the pay-as-you-go services, paying minute by minute, he said, while the moderate talkers will be likely to sign up for the hybrid or bundled prepaid plans. Heavy talkers are the people that the top-tier carriers go after because they’ll spend a little more, Ho said.
“Carriers are trying to pick and choose and get the most ARPU they can get in the prepaid space,” he said. “Just because you’re in a prepay segment doesn’t mean you don’t have any money.”
And seeing as how the big guys always have to be in style, there are of course, prepaid services for each carrier. Similar to Leap Wireless’ new PayGo service, Verizon Wireless INpulse prepaid service offers $1, $2 and $3 daily prices that include varying per-minute prices and unlimited on-network calling. The $1 price includes 10 cents per minute for all calls. The $2 price offers unlimited night minutes and bumps the weekend and messaging rates down to 5 cents per minute and/or message. $3 per day adds unlimited weekends and drops the per-minute and messaging rate down to 2 cents.
“Verizon is not the cheapest,” Ho said. “But the demographic of Verizon Wireless people is that they’re willing to pay for the network.”
AT&T Mobility’s GoPhone prepaid service features two pay-as-you-go options. The carrier boasts a dollar-per-day plan that charges 10 cents per minute and features unlimited on-network calling. To solely go minute by minute, the carriers charges 25 cents per minute. Now, 25 cents is no clearance-rack deal, and Ho said it might be time for the carrier to re-evaluate its choices.
“AT&T should be doing something,” he said. “From a competitive standpoint, they’re weak right now, relative to the competition and they’ve got a lot to lose because they’ve been adding a lot of prepaid people in the past, and in the last quarter, they didn’t do so hot.”
And don’t forget about T-Mobile USA Inc. Always trying to keep up with the trends, the carrier features a prepaid service dubbed FlexPay, that features the $1 per-day charge and includes unlimited on-network calls and 10 cents per minute for all other calls. FlexPay also boasts a pay-as-you-go option where customers can purchase minutes as they need them.
Ho said prepaid space is competitive, and things are likely to heat up as the holidays approach. Every carrier wants to have the hottest look with the hottest price, so deals and sales should pop up soon, very soon, according to Ho.
“Nobody wants to drop the price on Black Friday,” he said. “A lot of stuff should happen now to early November.”


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