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Prepaid Wireless Tracker #83, May 2015 - Google Finally Launches No Contract Wireless "Project Fi"!
May 01, 2015

Prepaid Wireless Tracker - May 2015 Issue #83


Prepaid wireless is a growing and truly exciting industry.  At I try to provide you with in-depth information that isn't readily available anywhere else.  The content is original, and created from firsthand experience working in the prepaid wireless industry for over a decade.

This monthly email provides you with a quick glance at what's trending in the news so that you can easily keep informed.  I believe in brief, to-the-point summaries/commentary so that you can move onto other tasks in your day.  Each snippet includes a link to the original story should you be interested in the full details.

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Google Launches No Contract Service "Project Fi" - Should Carriers Be Scared?

Google's Project Fi is a no contract wireless service that uses WiFi, T-Mobile, and Sprint networks.  At a base price of $20, it's not really the cheapest deal in town, but offers good value with access to multiple networks.  The service currently, however, only works on the Google Nexus 6 smartphone, which is the only phone capable of supporting the required automatic network switching.  Therefore, while small MVNOs who offer low cost prepaid service, and large carriers are taking note, Project Fi is not yet a real competitive threat.  That said, it could quickly become a market disruptor if a large number of phones are supported in the future.

Note that the service also allows you to pay only for the data that you use by crediting you for unused data.  Revenue received for unused services is historically an important source of margin for carriers, so this really helps to put pressure on classic providers.  This concept isn't new, however, with Google behind it, the spirit of the threat is completely different.

Ideally the service would work on all nationwide networks, however, the chance of AT&T and Verizon allowing Google's service on their network is very unlikely in the existing paradigm.  In fact, if the service becomes too widespread, T-Mobile and Sprint will renegotiate their contract, which they have the right to do with the existing clauses.

If at some point in the future WiFi becomes truly ubiquitous, like water and electricity, then we could see a major shift in how carriers and and customers think about wireless phone access.  Perhaps Google will become a major investor in Sprint and/or T-Mobile, and truly put pressure on AT&T and Verizon to compete.  It seems unlikely that Google would outright purchase and operate a telecom.   It will be interesting to see how this service evolves.

Verizon Is Shedding Prepaid Customers

It's not surprising that Verizon is losing prepaid customers.  Their prepaid plans have always bordering on pathetic, and they have openly said that they are not interested in this lower market segment.  Personally, while I believe it will be awhile before they're materially impacted, the long term future (10 years) will see postpaid as the minority.

It's a misconception that prepaid customers are lower value, particularly with low or no phone subsidies.  The industry is at an inflection point where the average customer (including high end users) are seriously starting to question why they should lock into a contract, and why they're paying so much more for a contract plan.  Is it really better coverage and service?  The easy answer is "no".  That said, there are often still coverage differences on prepaid, and people are always hesitant to change habits and perceptions.  

I expect that Verizon is thinking that when it becomes critical they can simply slash prices and promote no contract plans.  Unlike smaller carriers who need to develop a brand presence, Verizon won't have that challenge.  In the meantime, however, Verizon is essentially irrelevant in the prepaid space.

QR Codes Make Top-Up Faster & Keeps Phone Numbers Private
QR Code Press

This new process uses a QR code scanned from a phone to capture your phone number for a topup transaction.  Real time topup has long since been the preferred in-store payment method, however, it requires the clerk or customer to manually enter the phone number.  This is time consuming, and prone to error.  Requiring double-entry helps to minimize errors, however, it's still time consuming.  Associating your phone number with a reusable topup card is another method that seeks to eliminate phone number entry, however, setting that up is not intuitive, and leaves the customer with yet another card to carry around.

I like this QR code process, and quite honestly, I'm surprised it hasn't been done already.  It will also need a process to support the times when you want to topup a different account than the phone you are holding.  Perhaps an app that manages multiple QR codes for each account you have could be a solution.  However, that might remove some of the simplicity of a single QR code approach.  That said, the long term solution will be NFC, so I'm thinking the QR code approach will be an interim solution.  Depending on what retailers need to develop to support it, it may be a non-starter when they can clearly see NFC coming  as the de facto standard.  It will be interesting to see if this takes off.  Had they implemented this 5 years ago, it would have been a massive hit!

Walmart Family Mobile Gets More Data
Wireless Week

Walmart's Family Mobile plan, powered by T-Mobile, has added 500MB more data to each plan.  This was a needed change to remain competitive, so prospective customers who recently evaluated the program may want to reconsider!

Cricket Wireless Launches Samsung Galaxy S6 With New Payment Plans
Tom's Hardware

Cricket now offers the Samsung Galaxy S6 flagship smartphone.  Although prepaid is still lagging behind the launch of popular phone releases, I would say that less than a month isn't too bad.  It's not clear whether the delay is due to OEM requirements, or prepaid carriers themselves moving more slowly.  Either way, this small delay is hardly material.

Rather than outlay $650, customers can now use one of Cricket's financing plans.  There are several options.  I recommend avoiding any program that charges interest (even if deferred!), and paying it off as quickly as possible.  There's nothing worse than paying off a phone that is either damaged, or becoming obsolete.  And if you take more time to save up, you're likely to see the price of the phone decrease!

Comments? Ideas? Feedback? I'd love to hear from you. Just reply to this zine and tell me what you think!

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