Prepaid Wireless Tracker
- November 2013 Issue #65
wireless is a growing and truly exciting industry. At
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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
informed. I believe in brief, to-the-point
so that you can move onto other tasks in your day. Each
includes a link to the original story should you be interested in the
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Target To Launch New Prepaid Brand
"Brightspot" On T-Mobile Network
So Target is launching a new prepaid affinity brand using the
T-Mobile 4G network. This actually makes perfect sense given
the success that Walmart has had with its exclusive TracFone Straight
Talk branded prepaid product. Personally, I'm very annoyed by
retailers getting into this space. They should stick to
distribution and stop confusing customers with too many options, many
of which are very similar. At some point, for wireless and
other branded products, retailers are going to upset branded companies
to the point where they'll seek other less hostile distribution
Imagine that as a wireless company (or any company in any industry that
sells product at Target or Walmart), you spend millions of dollars to
create awareness, and direct customers to their local retailer, only to
have that retailer turn around and try to sell the customer their own
similar retailer branded product. It still amazes me that
they've been able to sustain this model for so long. As a
consumer I'll almost always buy the cheaper Target brand that contains
the same active ingredients (ex. detergent, or 4G network for
wireless). However, as a wholesaler, they're stealing my
T-Mobile Beefs Up Its Plans With Free Mobile
U.S. Pro Cycling News
Until now, T-Mobile was charging $15/month for access to mobile hotspot
functionality on smartphones, which was in line with most major
providers. Now it is including it in most of its prepaid
plans; each plan is assigned a data limit for mobile hotspot usage.
I feel that although this is not a massive change, it's an
additional great value. I suspect that in addition to adding
to its competitive arsenal, this model encourages trial of the hotspot
feature. A certain proportion of customers will find it to be
an extremely useful feature, and likely seek to purchase additional
The only real downside is on carriers that don't support simultaneous
voice and data (which goes away with LTE), and the hit on battery life.
Hotspot users will definitely want to be near an outlet or
risk rapidly draining their battery. Notwithstanding, this is
good news for T-Mobile customers!
AT&T To Kill Aio Wireless
In Favor Of Cricket
Just barely one month following the nationwide roll out of Aio,
AT&T's latest no contract brand, it announces that it will kill
Aio in favor of Cricket assuming that deal is approved. This
really makes a lot of sense, and is a good sign that AT&T
management actually understand market segmentation. The
reality is that Aio would overlap tremendously with the Cricket brand,
and simply wouldn't be worth the operational expense to maintain.
Sprint faced a similar challenge with Virgin Mobile and Boost Mobile,
however, in that case both brands were so well established, that
despite the overlap, they can't afford the risk by discontinuing either
brand. AT&T won't allow that to happen by killing Aio
in its tracks before it even has a chance to establish itself.
This is good news for the world of prepaid; one less brand to
consider in this confusing, and highly over-crowded market!
Boost Finally Gets iPhone!
The real news here is not that Boost is getting the new iPhone 5S and
5C, but that they're getting iPhones for the first time ever!
Boost had to be feeling a little left out of the party when
even its own sister prepaid brand, Virgin Mobile, started getting the
iPhone 4. No doubt that cannibalization of Sprint postpaid
was the driving factor behind the delay. At this point,
however, to remain relevant in the prepaid space, Boost needs to be
able to say that it offers the iPhone, even if the price will be so
high that only die hard Apple fans would be willing to buy it.
So congratulations Boost; welcome to the real world of
Cricket Gets iPhone 5S And 5C
Cricket was the first prepaid carrier in the U.S. to get the iPhone
(starting with the 4), and it's certainly not stopping now.
Other than knowing it's now available, it's interesting to
note that this is the first Cricket iPhone that actually works on its
4G network. All previous versions didn't support its AWS
spectrum. This was an Apple issue in terms of it not having
an antenna to support that frequency.
Note, however, that Cricket does not yet have nationwide 4G coverage,
so depending on where you're using the phone, you may not have access
to 4G anyway, though it's nice to know it's capable when their coverage
expands (either buy partnership with Sprint, or move to AT&T).
Prepaid Growth Is Hurting Apple
Apple has an interesting dilemma here. There's no doubt that
its volume of iPhone sales has been boosted tremendously by postpaid
carrier subsidies. On prepaid, where subsidies are small to
nil, the iPhone becomes ludicrously expensive. Prepaid
carriers have implemented device financing programs to aid in getting
high end (or shall I say high cost) smartphones into customers' hands
without the need for them to fork over hundreds of dollars to get
started. However, the long run for Apple is more worrisome.
The fact is that the competition is so fierce now that Apple's iPhones
really have very little benefit other than to say they're so feature
lacking that they're "easy to use" and "just work". The
iPhone build quality is also fantastic, however, most people ultimately
put on cheap rubber cases. And even the expensive cases
ultimately hide the look and feel of the iPhone's design elements,
leaving the build quality only resulting is a greater propensity to
break than more highly featured phones with uninspired, but more
flexible (i.e. drop friendlier), plastic cases.
That said, can Apple go downstream without impacting its brand?
The answer is that unless it wants to go the way of the Mac
(a smaller niche product), it must become more price competitive, and
prove that it can once again be a leader in feature development.
Can it produce a cheaper phone; absolutely! In
fact, it can not change anything, and simply accept lower (but still
very acceptable) margins, and offer less expensive phones (and tablets
for that matter). It has the scale to bring costs down.
I expect it fears the reduced profitability, which the market will not
like and decrease the stock price. However, lame public
markets aside, Apple is fully capable of offering a more reasonably
priced iPhone to compete for customers who are unwilling to fork over
$500-$650 on a smartphone. All that said, I fully expect
Apple to stand its ground until it's lost massive market share.
They'll only be motivated to make a move when sales volumes
decrease to the point where their high margins can't make up for the
Cricket Shareholders Approve AT&T
On Oct 30th Cricket shareholders approved the $1.19 billion
cash sale of the company to AT&T. As I noted
in last month's newsletter, anyone voting against this deal should be
considered insane. As Cricket already went through bankruptcy
once, and over the decade that followed it is only now just inching
towards profitability; the company really is in dire straights in this
highly competitive market. The FCC and the Department of
Justice still need to approve the deal. AT&T is
hopeful that it will close this year, however, it's possible that it
could slip into the first quarter of 2014.
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- Added top horizontal navigation
- Updated Tethering to note that T-Mobile
now includes mobile hotspot
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