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More consumers ready for prepaid switch

We’ve seen this trend going for the past year, maybe year and a half. People are switching from postpaid to prepaid. We see it in the quarterly earnings reports, where a number of companies — notably Sprint and T-Mobile — are seeing bigger prepaid adds than postpaid. We’re also seeing both Verizon and AT&T with growing MVNO subscribers. We could see more in the future. According to a recent survey, 20 percent of wireless customers will swith to prepaid within the next six months. That seems like an awfully large number, but it’s not one the prepaid sector should bank on.

Just because 20 percent of survey respondents said that they will switch to prepaid does not mean that 20 percent of the overall population will act in kind. I know that there are statistical principles applied to these surveys, and that the 20 percent figure makes sense. But I can’t see any way that 24.6 million people will drop posptaid in favor of prepaid in the next six months. This is not only because of the extrapolation issue, but also because people lie about their intentions. They might not think they’re lying, but when the time comes to actually switch, I doubt they’ll all act on it. We might even see a majority that contradicts the statements they made on the survey.

Still, there is good reason to believe that the trend toward prepaid services will continue, even if it doesn’t mean 25 million subscribers in the next six months. The survey also shows that nearly 60 percent of people would at least consider switching to a prepaid unlimited plan that cost $50 per month. We’re seeing more and more of those all the time. Perhaps when the big carriers move into that price point we’ll see a larger shift. But the carriers do have to know they’d be cannibalizing their own postpaid services.

3 Responses

  1. Des H Says

    Yes, the predicted figures maybe slightly higher than what actually comes to pass, but I think more and more people are starting to wake up to the fact that they are wasting so much money sticking to a contract. And let’s not even mention the fees, overages and etfs! I decided about a year ago to switch to Net10 prepaid as soon as my contract expired, and I stuck to my decision. Was the best move I could have made, as I now pay $50 for unlimited everything, with no contract, no bill, no huge monthly expenditure and all on the same network I was paying a fortune for using! They offer me the flexibility of switching between unlimited, a $25 plan(which works out to 3c/minute)or a $15 plan depending on my monthly needs, and all at no extra cost! Now tell me why people are waiting for the bigger carriers to move in? Will they honestly offer any better? They may actually find cannibalizing their own postpaid service to be the only way to save some of their clientelle…

    Posted on November 8th, 2010 at 1:18 pm
  2. Damien Says

    I agree with Joe regarding difference in what people would like, or prefer, and what they would actually commit to. I find it very sad that people are so scared of the unfamiliar, to their own detriment. I mean tracfone has been around for much longer than one and a half years, giving people more than enough time to proverbially climatize to the change. Recently, even more service providers have entered the market, making it even more competitive. And still, now years later only, are people catching onto the idea that prepaid might be very good for them.

    Posted on November 14th, 2010 at 3:43 am
  3. Kenny Urich Says

    I don’t know about 26 million switches, but judging by my circle of friends and family the trend to prepaid, whether monthly or PAYGO, is moving upward. My wife and I dropped AT&T a few months ago and are very much satisfied with our decision. She opted for MetroPCS because of the price, the “cute” phone and her heavy usage, and I opted for Net10, using the $15/300 Minutes/60 Service Days plan. I say that for mosy people at least there is not a reason to stay with any of the postpaid plunderers…er, I mean, services.

    Posted on November 18th, 2010 at 3:00 pm

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