Prepaid Wireless Companies
& Their Off-Brands
Are off-brand prepaid wireless companies a good deal, or a marketing
ploy to get you to buy inferior service?! Firstly, if you
found this page looking to compare prepaid wireless provider plans in
detail, please scroll down to find links to a plethora of information
on this site that do just that. Second, you may be asking
yourself "What is an off-brand provider?". I classify these
as either prepaid brands owned and operated by national providers (i.e.
AT&T has Cricket, Sprint has Boost & Virgin Mobile,
MetroPCS), or MVNOs that run on the national provider networks (ex.
TracFone, PagePlus, Ready Mobile, Google Project Fi).
When we see, for example, that Cricket offers the same, or virtually
the same, features as does its parent company AT&T, but at a
fraction of the price, is there a catch? Are we getting
scammed into a lesser service? How can they do that without
cannibalizing their postpaid customers? Is there anything we
need to know to avoid getting scammed?
I've described in detail what MVNOs are, and why they exist, so you can
catch up on that by heading over to MVNOs. Here I'll focus on
brands that are fully owned and operated by the major
carriers. Is there some kind of underlying trick or secret
strategy that we customers need to by privy to? The answer to
this question can be uncovered by exploring the following questions:
Why Have a Different Brand?
Why don't national carriers simply use their own brand, and have a
prepaid service option? This is exactly the strategy that
AT&T had historically with its GoPhone product.
GoPhone has always been an AT&T prepaid service.
Sprint also dabbled with Sprint Prepaid. The value of this
approach is leveraging an already recognizable brand.
However, using that recognizable brand is also a detriment!
What I meant by that is that such an approach doesn't allow the carrier
to re-invent themselves. It also more directly competes with
its postpaid products. It's not uncommon, for example, for
people not to know that Cricket is owned by AT&T.
It's really similar to car brand strategies that have proven the power
of brands, even when people actually do understand their
associations. For example, Toyota & Lexus, Nissan
& Infinity, Honda & Acura. These brands can
hit different demographics, different value propositions, and
completely different positioning, even when the underlying platform,
and technology are the same. Companies try to style them
differently enough that customers paying more for the luxury brand
don't feel ripped off, however, it's still often very obviously a
The same theory applies to the wireless industry. Carriers
- Target different demographics.
- Reinvent themselves by portraying a different brand meaning
- Take risks that don't impact the parent brand or revenue if
- Minimize cannibalization of postpaid customers by the
simple lack of
awareness of the brand relationship.
- Pivot strategies more quickly with a sub-brand than trying
to do so
with the entire parent company.
- Target different competitors to attack new markets to grow
Is It a Scam Or Are There
Catches We Need to Know?
The short answer is, NO, it's not a scam at all. The
discussion above should help provide you with confidence that there are
real, perfectly honest business benefits to operating prepaid under a
different brand. There are, however, some "catches"
customers should be aware of. Note that many of these have
actually been implemented by prepaid wireless companies to help
differentiate their prepaid and postpaid programs. In other
words, they are artificially introduced into the plans to help them
justify to postpaid customers why they're paying so much more for
essentially the same network and services! Here are the
- Coverage - Typically carriers limit
their prepaid brands to
only run on their native network, and don't allow roaming on third
party networks. This provides a cost savings, as well as
postpaid brand differentiation.
- Data Speed - Prepaid carriers sometimes
speeds. For example, Cricket historically has been limited to
8Mbps, while AT&T customers get closer to 40Mbps.
This speaks solely to creating postpaid brand
differentiation. Note, however, that even though this sounds
like a large speed discrepancy, most of us wouldn't be able to discern
the difference. On WiFi, my home broadband connection often
gets less than 10Mbps. So customers really need to consider
what the real world impact is for you. It's not as though
they're throttling prepaid customers to 3G or 2G; we still get 4G, but
at a limited rate. These speeds are more than sufficient to
stream HD video, and perform any other tasks on our
smartphones. Perhaps less than 1% of the target population
may take issue with this speed reduction.
- Phone Cost - Carriers that still offer
subsidies on postpaid don't do that on prepaid. Some prepaid
wireless companies also limit what kind of financing or leasing options
are available on their prepaid brands.
- Features - Some carriers limit certain
features from being
available on prepaid. For example, historically T-Mobile
doesn't allow its prepaid customers to access Binge On, which allows
you to stream video without counting towards your data plan
allowance. Some will not offer, or limit international
roaming. That said, many prepaid providers offer fantastic
international add-ons that often aren't even available on
postpaid! In addition, mobile hotspot may be a feature only
included on a postpaid plan, and may be unavailable or be subject to an
additional add-on cost for prepaid.
- Priority - Some prepaid wireless
companies will prioritize
postpaid traffic over prepaid when the network is congested.
This can result in prepaid customers noticing a speed or call quality
reduction at peak hours in certain cities or areas. Again,
think about whether you're impacted by this or would even notice.
interesting to note that sometimes prepaid has features that
postpaid customers don't get! For example, there are several
prepaid brands that offer a $5 monthly discount for setting up
autopay. Also, consider that most prepaid plans include
telecom taxes in the plan price, while postpaid customers have to pay
these taxes on top of their base plan price.
Prepaid wireless companies running prepaid under a different brand is
NOT a scam. In addition, the underlying differences are often
not material to real world use. For those differences
that are important to you, you'll want to weight them against
benefit of prepaid, and not having to sign a contract. As we
have seen over recent years, postpaid and prepaid are converging, with
postpaid looking more and more like prepaid. I continue to
believe that prepaid is the future (as it has been the
standard in other countries for many years). These off-brands
largely benefit customers, and should not be seen as negative or