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Are people really switching to prepaid?

A recent survey, which we discussed Monday, found that many Americans are switching to prepaid services from their postpaid deals. Specifically, they found that 17 percent of contract cell phone users have switched to prepaid within the past six month. That seems like a pretty significant number, so it came as a surprise to see this headline come up in an alert: No Huge Shift to Prepaid Wireless Foresen due to the Recession. Hm. What could he mean by that, in the face of the data presented?

It would have helped had I found this first: the author, Samual Greenholtz, published another article on the same day, refuting the findings of the New Millennium Research Council. Specifically, he questioned their methodology in extrapolating numbers. So perhaps 17 percent of postpaid users have not, in fact, switched to prepaid.

Per Greenholtz:

While possible that some people may switch from post-paid to prepaid plans as a means of saving money due to additional fees for the former, it is not likely that there will be a big shift. The rationale is that the wireless carriers are getting smarter about how to price to consumers so that its more of a hassle to switch to prepaid than it’s worth.

Is this true, though? Has there been any indication that wireless carriers are improving postpaid plans? Perhaps Sprint, with their all-inclusive Simply Everything plan, but even then it is geared towards the high-end user. When was the last time the lowest-end offering ($40 per month for 450 minutes on Verizon and others) has improved? These are the customers that wireless carriers risk losing to prepaid.

If carriers do improve their low-end offerings, then perhaps Greenholtz’s analysis will hold true. However, with few noticeable changes recently, and having heard no rumors of such changes, it seems doubtful that this will ring true. Customers will continue to switch to prepaid. At this point, would it be a surprise to see the total prepaid subscribers jump to 20 percent after the first quarter?