Prepaid Cellular Phone Services
How Did Prepaid Wireless Get So Complicated?!
How do you compare prepaid cellular phone services? Does
that sound like a
silly question to you? Well, maybe it's a pretty basic
but once you start digging into it, you'll find that prepaid wireless
plans have become so complex and confusing. Let's take a look
how prepaid plans have evolved over time:
Prepaid Started Off With
Believe it or not, when
prepaid cellular phone services were originally launched, they was
pretty straightforward. Load
money on your account, make a call, and your account is deducted for
each minute you use; simple and easy, right? Prepaid had the
benefit of being a no contract plan for occasional users who didn't
want, or couldn't get a contract cell phone. (For a more
discussion about the benefits of prepaid wireless visit the Why
section.) So how did things evolve
where they are today, and how did they get some complicated?
Customer Changed Over Time
prepaid wireless launched in North America, it was targeting what
described as low value customers. Typically those
couldn't qualify for a contract plan usually because of low credit, or
when a large deposit was required. I hate to say it, but
speaking (which is the spirit of this entire website!), carriers were
targeting the bottom of the barrel of wireless customers. So
service to these customers at all? Well, the bottom line is
they'd rather have them as customers and make some money from them,
send them away altogether. The reality is that even these
end customers have always been profitable. And once in the
hopefully over time they would buy up, or graduate to a
contract plan. It makes sense when you think about it.
time, the volume of
customers fitting into this category began to grow. Without
into a philosophical discussion or debate about why this segment
to grow, or arguably was there all along, lets just take it for granted
that it was a lot of people, and interest in prepaid was growing.
result, all kinds of prepaid cellular phone services started
springing up, but again, with very simple plans. Even what
would consider basic features such as voicemail and call waiting
weren't readily available, and virtually always cost extra for carriers
that did offer it.
then found that their prepaid customers wanted more features.
voicemail and call waiting, but also more flexibility and better value.
plans began to evolve, offering more
for how much money you could load at one time, different expiration
dates, better per minutes rates, day time and evening rates,
mobile-to-mobile rates, etc.
Understandably, as more
and features became available, the appeal of prepaid did as well.
This variety of course lead to increased complexity.
Offers Have Evolved - A
become so difficult to compare prepaid wireless plans. Around
2006 carriers started offering monthly plans to meet the needs of
increasingly more sophisticated customers. Basically,
started saying: "Just because I don't want to sign a contract, doesn't
mean that I want to
get ripped off paying really high per minute rates - please give me
better value!" So along came prepaid (still no contract)
that were commonly known as Hybrid
. They're "hybrid"
they look and feel much like a postpaid plan by offering a bucket of
minutes, text messages, voicemail, etc. for a monthly fee, however, on
a prepaid basis. For a deeper dive into this plan type and
please visit the Types
monthly, or hybrid plans were great because they offered much better
value than did pay-as-you-go plans, and felt a lot like monthly
wireless plans,l but without the contract. They didn't,
close to competing with the value offered by postpaid contract plans,
but still a great step forward. But there was a problem...
Arrival of Daily Plans
problem with the monthly/hybrid plans was that carriers found that
customers couldn't consistently pay on time each month. What
a large number of customers would have interrupted service (a bad
customer experience!), and carriers lost revenue, because they were
expecting a specific number of continuous monthly payments (i.e. they
were expecting 12 payments when they were only getting 11 or less
the basis for how they priced the cost of the plan. In other
became somewhat of a lose-lose for customers and carriers.
carriers continued to offer hybrid plans, they introduced the concept
This allowed customers to pay usually from
$1 to $3
on a daily basis for a fixed set of services (which ultimately evolved
to unlimited). This approach
better value than the PAYG plans, but not quite as good as monthly
plans. So, if you couldn't afford a regular monthly payment,
still get good value by paying a fixed daily fee. Note that
could typically switch between all plan types fairly easily, although
some carriers did charge fees to make changes. Also note that
some carriers allowed you to pay the daily fee only on days that you
used your phone, while others charged the daily fee no matter what.
Obviously, the former approach was much more desirable.
These plans are now basically extinct as they became to
complicated to communicate and manage, and carriers much preferred to
veer customers towards monthly unlimited plans.
Then Came Monthly
the options expanded, and competition began to really heat up in
new prepaid wireless carriers entered the market (ex. MetroPCS;
acquired by T-Mobile, Cricket Communications; acquired by AT&T,
that really disrupted the market. They basically came in with
blazing, essentially saying that they could provide the best value, and
even compete with postpaid plans. And so now we saw a flurry
plans being offered by new prepaid
as well as the big players. i.e. The game was on!
The Bottom Line - It's Confusing!
with this evolution customers win, because we get better prices and
more services. So much so that a new type of customer is
attracted to prepaid - that being postpaid customers! The
prepaid wireless, and the flexibility of no contract, is now so
powerful that many
prepaid plans can be easily compared to the value of postpaid.
However, the bad news is that prepaid offers are so abundant
that it really is confusing to compare prepaid wireless plans.
don't care who you are, the options
now are simply overwhelming. That said, it's arguably no more
confusing that postpaid plans.
Having worked in the prepaid
industry for over a dozen years, it still took me countless hours to
the initial comparison charts,
and a lot of time to maintain them as new plans are launched and
existing ones change. Most of us wouldn't want to spend that
to compare prepaid wireless plans; it's just way too time consuming,
not to mention
frustrating when important plans details are difficult to find on
carriers' websites. That's why it makes me very happy when
site contact me to let me know that they found the site useful; thank
you to those visitors!