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Jul 15

Wireless Users Shifting Away From Contracts to Prepaid

According to new data recently crunched by consultant Chetan Sharma, there's a notable shift among United States consumers away from two-year contract wireless plans -- and toward more cost-friendly prepaid options. According to Sharma, the top seven wireless carriers in the United States lost 52,000 postpaid customers last quarter, the first such lost in the wireless market's history. Prepaid customers have been growing 15% year over year (compared to 1% for postpaid), and now account for 25% of all wireless consumers. Sharma notes that Sprint is the beneficiary of many of these users:

In overall net-adds, Sprint bested both of its bigger rivals for the first time since Q1 2002. That was exactly a decade ago when Cingular and Nextel brands were still around, before Google IPO and before Zuckerberg enrolled into Harvard. In fact, Sprint is the only US operator that has added more than 1 million subs every quarter since Q4 2010. However, most of these net-adds are coming from prepaid and wholesale segments. If we look at the net-adds over the last 4 quarters, AT&T comes out on top by a distance. In terms of postpaid net-adds only, Verizon is the clear leader during the same time period.

This trend toward prepaid should accelerate this year as more and more MVNOs seem determined to get creative on pricing, while the nation's two largest carriers seem intent on finding new, creative ways to limit consumer choice while increasing prices.

Source: DSL Reports