When will prepaid carriers offer tablets? posted by Joe on September 21st, 2011 - 2:41 pm | Mobile Data
At this point it’s only a matter of time before prepaid carriers start to offer their customers tablet computers. Many, if not most, prepaid carriers already offer smartphones, and tablets are the next logical progression from that. It could be coming sooner than you think, too. Cricket actually planned to offer its customers a tablet this year, but recently backed off the idea. That might not be a sign that it won’t work in general, but rather that the timing isn’t right. But that will change soon enough.
In order to justify a tablet offering, a prepaid carrier would have to realize a value-add from it. That is, it’s not enough to just allow people to buy certain tablets through them. Maybe they’d make a profit on the individual sale, but cellular carriers make almost all of their profit on monthly plans. To sell a WiFi-only tablet with no service plan, then, would prove a rough proposition. It also rules out prepaid carriers that don’t offer data services — or, in the case of carriers like Straight Talk , restricted data services.
Perhaps providers such as Boost Mobile and Virgin Mobile , which have the direct backing of Sprint’s 3G network, can probably work out something. Both companies offer 3G smartphones, so they could probably work out some plan — perhaps in the form of a surcharge, as Boost recently implemented for Android phones — whereby customers could get the kind of data plan they need for a tablet. But true MVNOs probably couldn’t handle the additional data requirements of tablets.
Even Cricket didn’t plan to offer its tablet in conjunction with its 3G network. Instead it planned to upsell customers with a mobile broadband plan plus MiFi device. That sounds good in theory, since it’s essentially the same as having a direct 3G connection. But that’s another device to buy, which will turn off many cost-conscious prepaid users.
This could all change, of course, as many of these carriers switch over to LTE. Perhaps at that point Cricket would be willing to offer a tablet along with service. MetroPCS seems prime for an offering such as this, too. In fact, company officials have said that they’re looking at late 2012 as a time when devices such as smartphones and tablets will become available more cheaply. But without the bundled offering it’s difficult to imagine why a prepaid carrier would offer a tablet.
Another issue prepaid carriers face is the quality of tablets they could offer. Many postpaid carriers offer tablets with data plans, but as with smartphones those involve a subsidy. Since prepaid carriers don’t offer deep subsidies, they’d face the same issue they did with smartphones a few years ago. That is, they’d have a hard time getting their customers quality, low-cost devices.
There is something of a tablet overrun in the market, and maybe smaller carriers could use that to their advantages. For instance, there are likely many unsold Samsung Galaxy Tab units that a prepaid carrier could unload for a cheap cost. Opportunities like that could perhaps push up the time frame for tablets on prepaid carriers. But there are still other issues to overcome.
As we learned earlier this year, Cricket is near its 3G capacity and has reacted by backing off its mobile broadband offering. This is also perhaps why they’re choosing not to offer the tablet they had planned for this year. Issues like this will keep many smaller carriers from offering tablets. The answer might be 4G LTE networks, which could put MetroPCS at an advantage in the tablet market. But there are no guarantees there, either.
It seems pretty clear that prepaid carriers will again follow postpaid carriers into the realm of a new technology. Yet it doesn’t appear that will happen soon. There are just too many obstacles in the way at this point. But in due time, perhaps towards the end of 2012, we could see these smaller carriers catch up and start to offer low-cost tablets along with their mobile broadband services.