Why No-Contract Wireless Is on the Rise

Much of the subscriber growth reported by wireless providers comes from increasing numbers of prepaid, no-contract customers

By Paul Kapustka, PC World |  Mobile & Wireless, 3g, wifi

An ever-growing number of service providers--joined most recently by Walmart and AT&T--now offer a wide array of prepaid or pay-as-you-go cellular service plans.

These companies are responding to a growing need in the marketplace: During a slow economic recovery, more and more people are put off by the cost of an expensive two-year wireless service contract, and they're looking for alternatives.

[ See also: Paying too much for WiFi, 3G? You have options ]

With prepaid plans, customers typically pay for a device upfront, and then either buy a specified amount of minutes to use, or pay month-to-month without entering into a long-term contract.

Once associated with boring, limited phones aimed at relatively low-income users, prepaid plans have become the new black. Many prepaid providers now offer--or will soon offer--support for such data-centric devices as Android phones and BlackBerrys.

A generational shift away from voice calls to text messages, Facebook, Twitter, and other data-based methods of communication is also playing a role in the shift toward prepaid offerings. Providers are targeting the price-sensitive youth market with new pay-as-you-go options for data-only or data-centric plans and devices.

Whatever the cause, more people are buying prepaid wireless plans than ever before, and the trend shows no signs of slowing. During the last quarter of 2009, prepaid customers accounted for 65% of all net new cellular subscribers, according to IDC.

Better Phones for Prepaid Voice

The top prepaid voice providers in the United States include Cricket Communications; Leap Wireless; MetroPCS; Sprint's Boost Mobile and Virgin Mobile; and TracFone Wireless, which primarily serves voice customers.

The bigger cellular service providers--which include AT&T, T-Mobile, and Verizon--have significant numbers of prepaid wireless customers as well.


Originally published on PC World |  Click here to read the original story.
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