Why Prepaid Wireless?

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Why Prepaid Wireless?

Why prepaid wireless? This is a really interesting topic! It has become more interesting over the past couple years because the prepaid market has changed so dramatically. Let's review the the standard reasons why prepaid wireless has drawn so much attention, and then talk about why things are so much different now.

People were originally drawn to prepaid wireless because of the following benefits:

Doesn't require a credit check - People who wanted a postpaid account but couldn't qualify would get prepaid.

Doesn't require a deposit - People with lower credit would often be required to put down large deposits in order to get a postpaid account.

No surprise bills - Anyone who has had a postpaid account has at one time or another received a large bill due to extra charges that were completely unexpected.

Cost control - Similar to #3, there's no way to spend more than expected because you know exactly how much you're adding to your account.

Anonymity - Prepaid wireless does not require a name, address, or social security number.

However, with these benefits, customers also had to make certain sacrifices:

Higher handset prices - Due to the fact that there is no contract, carrier handset subsidies are lower.

Higher price per minute - For the convenience of no commitment, you had to pay more per minute. So, ironically, prepaid customers often pay more per month than the average postpaid consumer.

Limited services - With the objective of keeping operational costs low, and the thought that prepaid customers were less valuable, the amount and breadth of services was often limited. For example, games, GPS navigation, and sometimes even voicemail were either unavailable or expensive add-ons.

So what's different today?

Per minute pricing has come down so low, that with the right plan, you can actually get prices that are the same or even lower than postpaid plans!

With increasing competition in prepaid and in the wireless industry in general, handset pricing has come down considerably. So although you'll often pay more for your phone than you would if you had a postpaid contract, the prices are extremely reasonable.

You can get most, if not all services on even the even basic prepaid plans.

The Conclusion:

The answer to why prepaid wireless is a question. Why get a postpaid plan?! Consider that for access to the same or similar phones, the same services, and the same network, you don't have to be tied to a contract and no surprise bills. I know what you're thinking....it's too good to be true?! Well, yes, there are still some considerations (see below). But generally speaking, in my opinion, prepaid will continue to grow and take over postpaid as the dominant choice. More and more, prepaid will move away from its status as a second class product, to the product of choice for most, even those with great credit.

Considerations:

Even though you can get prepaid plans that use the same robust postpaid networks, carriers are currently still limiting access to the full network for nationwide calling. What does this mean? Essentially, they artificially create calling areas, such that if you leave your calling area, you will be charged additional per minute surcharges. Why would they do that if they can offer nationwide calling on their own networks? It basically comes down to the fact that carriers don't want to cannibalize (i.e. steal from) their postpaid businesses. Will this change? Absolutely! In my opinion, it's only a matter of time.

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