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Prepaid Wireless Tracker #65, Nov 2013 - Target Seeks Wireless Growth With New Prepaid Brand!
November 01, 2013

Prepaid Wireless Tracker - November 2013 Issue #65


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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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 partners.

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 customers!

T-Mobile Beefs Up Its Plans With Free Mobile Hotspot
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 data.

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
Billing World

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 prepaid!

Cricket Gets iPhone 5S And 5C
Geeky Gadgets

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
Sci-Tech Today

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 lost volume.

Cricket Shareholders Approve AT&T Deal
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.

What's New At

Following last month's site performance analysis, I'm now taking action to ensure that every page is fresh, and as user-friendly as possible.  With many hundreds of pages, this is going to be a lengthy process.  If you enjoy the site, the most valuable thing you can do to help is to share it on Facebook, Twitter, and Google+, as social presence is becoming an increasingly important element for search engine rankings.  Thank you in advance!

  • Added top horizontal navigation
  • Updated Tethering to note that T-Mobile now includes mobile hotspot

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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