Limited Smartphone Selection On No Contract Plans

by Dave Weyermann
(Rhode Island)

Why do vendors have a limited selection of smartphones phones to go with their no contract prepaid plans? Why won't any unlocked smartphone work with these plans?

Also, can I get a better price than $49/mo.? My needs are simple; I need GPS and a 1080 video in a smartphone but do not need high speed networks or very much storage on the fastest newest phone.
What would you suggest? Great site BTW.

Comments for Limited Smartphone Selection On No Contract Plans

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Aug 26, 2014
Prepaid Smartphone Selection Discussion
by: PrepaidWirelessGuy

This is definitely a great question! There's some history here, as well as some evolution that we've seen over the past few years. Historically, let's say approximately three years ago, there was an EXTREMELY limited selection of smartphones available. And these phones were not high end smartphones like iPhones and Galaxy S series, but rather low tier, entry level smartphones with limited specifications.

There were different reasons for this. Prepaid carriers didn't have the relationships with OEMs (Original Equipment Manufacturers) to convince them that they would be able to sell smartphones to prepaid, no contract customers. No one wants phones to sit around and ultimately go on deep discounts. It's not good for the carrier from a financial perspective, and it's not good for the brand of the OEMs. So what we got were low end phones (i.e. inexpensive!) phones that were more likely to sell well. This approach made a lot of sense at the time.

Once everyone realized that smartphones were great sellers on no contract, largely due to the demographic shifting away from the low/no credit type of customer to mainstream America, the selection began to improve. We even ultimately saw Apple's iPhone (starting with the 4) launched first on Cricket, then shortly thereafter on Virgin Mobile. Then the Samsung Galaxy S series of phones.

The selection, however, was still not vast, as these higher end phones were very expensive without contracts (i.e. phone subsidies), so it was more of a trial period. During this time the mid-tier smartphone selection began to expand. In 2013 we saw an explosion of smartphone selection across all tiers (low, mid, high). It's actually ironic that you're commenting that the selection isn't good, for compared to the previous 2 years before that, the current selection is actually fantastic.

That said, the selection is certainly not quite as good as on postpaid (to your point). While prepaid only carriers are not as hesitant to increase their selection, they also want to keep things as simple as possible. So many phones are so similar in features and specs, that a larger selection simply doesn't bring value to customers. It also makes it more expensive for carriers to manage the development, launch life cycles, maintenance, and support, as well as basic inventory management.

For postpaid carriers that also have prepaid brands, they typically limit selection to maintain a tangible difference between contract and no contract customers. Given the plans on prepaid are so rich now, some customers will stay on postpaid only because they can't get the phone they want on prepaid. In other words, it's kind of a game to avoid additional loss of postpaid customers, which are perceived as being more valuable.

In terms of using unlocked phones on prepaid plans, that's where things have been heading. BYOD (Bring Your Own Device) programs have been expanding across prepaid providers this past year. You can now even go into Walmart or Target (and wireless Dealers, etc.) and see BYOD kits for sale. These basically just contain a SIM card that can be used in a compatible unlocked phone; some include the first month of service, while some do not.

As all carriers move to 4G LTE, there will be more phones compatible across all carriers (assuming they're unlocked). Currently, there are still restrictions between GSM vs. CDMA carriers. There are also phones on the same technology (i.e. CDMA or GSM) that aren't compatible due to different frequencies deployed by different carriers. Many phones are now being manufactured with multiple antennas that can support virtually any frequency across the country, and even internationally. The iPhone 5 is a good example of a smartphone that can be activated on virtually any carrier if appropriately unlocked.

In terms of plan prices, you can now find plenty of plans that start at $25/month (some even below that) up to $40 that could meet your needs. It depends on how many voice minutes you need, and how much data you plan to use. Every phone has GPS, and every carrier has smartphones that have 1080p video recording. If you share more details about your particular needs, I can offer of some suggestions!

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