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Prepaid Wireless Is The Next Frontier For Carriers

Feb 07 2005 : Prepaid wireless services are the next frontier for US carriers such as Verizon, Cingular, Nextel and Sprint, who realize that new customers are needed as the monthly contract market gets saturated. Until now, the cost of acquiring a new subscriber was a major issue for carriers considering prepaid wireless services, as post-pay contract plans can potentially generate commission rates of USD 300 to USD 400. Carriers who are successful in prepaid however reduce subscriber acquisition costs by commissioning agents differently, not subsidizing handsets in the same way and differentiating prepaid service offerings.

With about 57 per cent of US consumers now holding a wireless phone, Yankee analyst Roger Entner has advised that carriers will have to rethink their approach to prepaid wireless services for future growth. Prepaid wireless is the fastest-growing area of the wireless industry, with the most profitable products targeted to the youth segment, the biggest purchaser of value-added services. Real time prepayment billing services are now being demanded by carriers who need to deliver differentiated services in order to market to the estimated 50 per cent of the US population that may be considering a prepaid cell phone.

US retailer 7-Eleven in 2004 launched its own branded prepaid cellular phone product and with major retailers such as Wal-Mart, Staples and Office Depot selling prepaid wireless products, the pressure on US carriers to offer differentiated services is growing. Some early prepaid wireless services required a credit card for recharging airtime, which was ironic given that prepaid wireless was primarily targeted to credit-challenged consumers. As prepaid wireless recharge mainstreams in the retail sector however, the number of prepaid subscribers is growing as consumers appreciate the flexibility of topping up as needed.

As Reported in the The Prepaid Press

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