Is Prepaid or Postpaid Better?

by Paul

I've been thinking for a while now whether prepaid is still better than postpaid. For a long time I was very convinced that prepaid wireless was really the buried treasure of the wireless world. And for a long time it really was the gem of the industry. Postpaid carriers required long term contracts, and monthly plan prices were more expensive than their prepaid equivalents.

The nice thing about postpaid was being able to walk out of the store with any phone that would range from free to two or three hundred dollars for the highest end smartphone. Prepaid addressed this barrier to entry by starting to offer phone financing and leasing options. The problem with that was that it made prepaid feel a lot like postpaid because you now had to sign a financing contract. Though the phone plan was still cheaper than postpaid, and you can payoff your loan at any time, so you don't quite feel locked in like you do with postpaid.

Then came smartphones that had what used to be high end features now available in lower end devices. So we could get an inexpensive phone without having to finance it. Of course, if you want a flagship Galaxy phone or iPhone, you'll still have to either pay a bunch of cash, or get financing. But the option is there to avoid that, which preserved the appeal of prepaid.

However, now postpaid carriers are starting to move away from phone subsidies, and most have begun decoupling their phone and plan pricing, such that the plan cost is coming down. Prepaid still seems to have generally lower prices for the equivalent features, however, that gap is closing. Prepaid also tends to have less network coverage as they don't include roaming on partner networks like postpaid carriers do. In addition, prepaid carriers often cap high speed data speeds, so postpaid plans get better performance.

So, really, is prepaid or postpaid better?!

Comments for Is Prepaid or Postpaid Better?

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Oct 19, 2016
Prepaid and Postpaid Is Definitely Blurring!
by: PrepaidWirelessGuy

Thank you for sharing your thoughts; you definitely have some great points! I think we can clearly conclude that the line between prepaid and postpaid has been blurring over time, and that the value proposition of prepaid has slowly been eroding. Or shall I say that the negative elements of postpaid plans have been dissipating as they are looking more and more like prepaid plans. It has definitely become a lot more confusing for customers to understand. Even T-Mobile has their postpaid month-to-month no contract plans, and their prepaid plans, which compounds the confusion!

With prepaid carriers offering financing, which basically puts you in a contract, and postpaid carriers moving away from subsidies, and decoupling the price of the phone and plan (as you said), these two program types are definitely converging. That said, postpaid still does require you to sign a contract (except for T-Mobile). Also, an important distinction is that you can be charged overages with postpaid, while this does not happen with prepaid. In other words, if you go over your plan allowance for a particular service, a postpaid plan will bill you on your next month's bill. This isn't the case for prepaid. With prepaid you need to add money to your account, or pro-actively add additional services in order to use them. Thus, prepaid has the benefit of never having surprise overages in a subsequent month.

With respect to coverage, your point is valid. Though coverage these days is so good that unless you live in a fringe area, you'll likely never notice a difference. For those that do, however, this is definitely an issue with some prepaid carriers. In terms of data speeds, yes, they generally cap speeds, however, I can't think of when I would notice the difference between 8-10Mbps vs. 20Mbps. Practically speaking, unless you're downloading straight files, you won't notice a difference while browsing the Internet, doing emails, or watching videos. Some power users may be bothered by this, however, I bet that 99% of users would never notice the difference. In addition, over time prepaid carriers will increase, and even eliminate these caps.

In conclusion, can we answer the question "is prepaid or postpaid better?" As is the case with most services, it largely depends on your individual needs. Prepaid really still wins out most of the time for most people. However, over time, I expect this blurry line to become invisible, and we'll see unsubsidized phones (with financing options), plan pricing that is pretty uniform, unlocked phones that can easily be switched between carriers, and no contracts to lock us in to a given carrier. I think a complete conversion to this is still a ways off, however, definitely veering towards that inevitability. Thus, the future may not even refer to prepaid and postpaid plans at all!

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