Recession Effect, More Prepaid customers!

According to NMRC, two out of three new wireless subscribers are going for prepaid instead of contract (postpaid) based subscription. So looks like the recession is eating into the Telco cash cow. Apparently, in the 4th quarter of 2009, first time the number of new prepaid wireless customers in the U.S outnumbered new contract-based cell phone providers. The data is based on research from Ovum/Datamonitor and IDG. With the prepaid deals looking lucrative, I can see a steady growth of prepaid subscribers this year. No wonder Metro PCS is doing great compared to other small operators. For a local coverage, Metro PCS has some great packages for prepaid subscribers, and the prices are very attractive. Worthy of mention is the Unlimited International calling for an additional $5.

According to the most recent available quarterly data:
• New prepaid cell phone subscribers accounted for nearly two thirds (65 percent) of the 4.2 million net subscribers added by U.S. phone carriers in the fourth quarter of 2009.
• The prepaid segment of the wireless market grew by 17 percent in the 4th quarter of 2009 to 54.4 million subscribers, up from 46.3 million in the same quarter in 2008. By contrast, contract-based cell phone service grew only 3 percent over the same period of time.
• One out of five cell phone subscribers are now using prepaid phones. The prepaid segment represents a larger proportion of subscribers in the US than ever before, hitting 20 percent in the 4th quarter of 2009, up from 18 percent at the end of 2008.
• Overall, there were 285 million wireless subscribers in the U.S. at the end of 2009.

Traditionally prepaid was more popular in developing countries due the cost of monthly subscription. However, Over a period of time, attractive packages like unlimited Voice, Text and Web access for as little as $45 per month has attracted lot of new and existing customers in developed countries to switch from postpaid to prepaid. Adding to that is the economy, which is yet to recover from recession. ( Yep! Don’t believe the baloney from congress that the recession is over and everything is hunky dory )