14 DAY TRIAL // Most major wireless carriers in the United States are mainly focused on providing postpaid services to their customers, rather than offering them the possibility to opt for pay-as-you-go ones, yet it seems that the impressive growth in the number of users opting for a pre-paid service could change the way things are in the near future.
The current precarious financial situation in the country has determined more and more mobile phone users to opt for pay-as-you-go services, while leaving the postpaid ones aside. Wireless operators won't receive this as a good news, yet customers are likely to have a lot to gain from it, as the competition will drive carriers into lowering the monthly fees for postpaid services, while the pre-paid ones are likely to include more options and become more attractive as well.
The financial results posted by operators in the US for the first quarter of the ongoing year show clearly that customers switched their focus from postpaid services, which allowed operators to see growth during the past few years, towards pay-as-you-go ones, which are mainly offered by smaller carriers like Leap Wireless, MetroPCS, and Virgin Mobile USA, targeting young, price-sensitive users.
“Post-paid (wireless service) growth is arguably over,” stated Craig Moffett, a Sanford Bernstein equities analyst, in a recently published research note, cited by Cnet. It seems that post-paid subscriber growth has been slowed down a lot during the first quarter of the year. According to Moffett, net additions of post-paid customers for all major carriers in the country went down 58 percent in Q1 2009, when compared to the same period a year ago.
At the same time, the number of pre-paid customers sees a continuous increase, as around 80 percent of the new wireless subscribers are reported to have opted for a pre-paid service in the first quarter of the year, a significant growth in percentage from the 50 percent new subscribers opting for such a service in the same period in 2008.
This trend is likely to determine carriers to lower the monthly fees for their postpaid services, so as to be able to further attract people into signing a one- to two-year service contract. Given the fact that operators also subsidize the cost of the phone one would like to purchase, this move might allow carriers to counterattack the emerging pre-paid offerings that would seem more attractive, mainly given the fact that no contract agreement needs to be signed.