Prepaid Wireless Services Continue to Grow

"Prepaid wireless service, once viewed as cheap-o status with bulky handsets, is becoming the next big wireless thing, according to a Washington Post report. Prepaid users account for 10% of the 182 million U.S. wireless users. The appeal to prepaid wireless services is that it requires no long-term contract and there is no credit check. The service, which primarily targets people between 13 and 24 years old, is growing at an annual rate of 25% to 30%, outpacing the wireless industry's overall growth rate of approximately 5%. (Source: Washington Post)"

From the CTIA newswire, this piece of news is very entertaining. It has taken nearly 5 years for the pay-as-you-go service to take off. There were many reasons for this slow take off, pricing structure and service structure limitations were one, failing to target the right market (teenagers) was another. In order to be popular with this market, the phone companies had to realize that they need to provide better looking, smaller, more modern handsets and provide a pricing structure that would allow teenagers who do not have credit cards (being too young or too poor for them) are able to obtain the phone and can afford to maintain it. When these two conditions were reached over the course of the last three years with services from t-Mobile, TracFone, Virgin Mobile, Cingular, Liberty wireless, Venture Mobile and Boost Mobile from Nextel. Boost was actually quite difficult to track down because there doesn't seem to be a link from the main Nextel site to the service and none of the known prepaid wireless carriers refer to it. The website, however, states they have just gone nationwide.

If you look at each of the above websites, it is striking how specific each market segment is staked out. Boost wireless and Virgin Mobile are obviously targeting teenagers, but of a very different background. Liberty and Venture target european visitors and business people that need a cheaper option. While TracFone, Cingular and t-Mobile also target teenagers, t-Mobile and Cingular are also clearly banking on the travel market due to their international market appeal. I know that Verizon Wireless also has a pay-as-you-go subscription, but it is not a focus of their business and they do not advertise it as heavily as other carriers.