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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.