As competition stiffens in the pay-as-you-go wireless market, America Movil's TracFone unit seems a likely survivor of an expected shakeout. TracFone's success continues to come in the low end of the wireless market as two other prepaid carriers, MetroPCS Communications (PCS) and Leap Wireless (LEAP), target higher-spending smartphone users. Leap recently began selling Apple's (AAPL) iPhone. And MetroPCS plans an aggressive push into faster broadband 4G LTE data services this year.
TracFone's customers, many of whom buy prepaid cards and phones at Wal-Mart Stores(WMT) and websites like PREPAIDONLINE.COM, gas stations and other retailers, aren't big spenders on Internet access, email and data products. They primarily use cellphones to make calls.TracFone has carved out a niche catering to "voice-only" customers, says Macquarie Capital analyst Kevin Smithen. TracFone's customers on average spend only $16 a month on wireless services. MetroPCS and Leap subscribers spend 2.5 times more, roughly $40 per month. But with 21.34 million U.S. subscribers, TracFone has quietly amassed the most prepaid customers of any carrier in the U.S. Besides prepaid servicers MetroPCS and Leap, it leads the nation's big four mobile phone companies — Verizon Wireless, AT&T (T),Sprint Nextel (S) and T-Mobile USA.
"I think TracFone will continue to target voice-only customers at the bottom end of the market," Smithen said. He says the company can get to 25 million customers without having to cut prices."But I'm not sure who might take notice except Leap and PCS," he said, since most other carriers focus on bigger spenders. MetroPCS reported a net loss of 186,000 customers in Q2. On Monday, Leap reported 289,000 net customer losses and said it would enhance its higher-end services.
TracFone, however, added 106,000 U.S. subscribers in the three months ended June 30. That's in addition to the 1 million-plus subscribers it got from its May acquisition of Simple Mobile. TracFone sells wireless plans through the Straight Talk and Net10 brands. Walter Piecyk, analyst at BTIG Research, says the Simple Mobile deal gives TracFone a new marketing weapon, "SIM-only" service. Simple Mobile doesn't sell phones. It sells prepaid SIM cards that are plugged into phones. Customers take out the SIM cards of AT&T or another service providers and insert Simple Mobile's. SIM-only service has caught on in Europe, but not in the U.S. Still, Piecyk in a report calls TracFone's Simple Mobile deal "likely the first step in a broadening strategy.
With new devices dazzling consumers and vying for their attention, prepaid plans offer a chance to try out a phone without a commitment; the customer can always sell it and get a new one and even switch carriers -- without fear of an early termination fee. NPD also found that the U.S. smartphone market is controlled by two players: Apple and Samsung.
Smartphone customers in the U.S. may be growing allergic to two-year contracts, a new survey suggests. Prepaid smartphone unit volume increased by 91 percent in the second quarter compared with the same period last year, contributing to a 9 percent increase in the overall smartphone market in the U.S., says market research firm NPD Group. By comparison, unit volume of post-paid smartphone sales (those sold with a two-year contract) stayed the same year-over-year. Prepaidonline.Com offers tops and airtime refills for every prepaid wireless carrier in the US and worldwide.
Today, you can get a prepaid smartphone that easily competes with contract phones, even a prepaid iPhone. You will pay more up front, but entry-level monthly plans are much less. For instance, you will pay $649.99 for a 16GB iPhone 4S and $30 per month for 2.5 GB data, unlimited texting and 300 minutes on Virgin Mobile. So for the first year, your out-of-pocket would be $1,010 before taxes and fees. On AT&T, you will pay $199.99 for the 16GB iPhone 4S and $89.99 per month for 3GB of data, unlimited texting and 450 minutes. So your expenses the first year would be $1,279.87 before taxes and fees and you would still have another year on your contract. Since taxes are included in the prepaid monthly price, the overall savings can be about 40%.
Before you get too excited, keep in mind that the latest and hottest new phones are still available to contract customers months before they trickle down to prepaid plans, and to the carriers that mainly offer them. And, like contract phones, prepaid phones are usually locked to the carrier you purchase them from. But there's no denying the savings. Prepaidonline.Com provides prepaid airtime refills for all smart phones from all carriers.
Washington - The percentage of cellphone users who use prepaid service "could very likely" reach 33 percent of all U.S. subscribers in the next 12 months, up from today's 25 percent, two analysts contended.
Telecommunications analyst Mark Lowenstein of Mobile Ecosystem and Sam Simon of the New Millennium Research Council forecast continued growth in prepaid wireless for three reasons. One is the growing availability of prepaid wireless services with unlimited calling, texting and Web access. The second is the rise of inexpensive, feature-laden Android smartphones that can be retailed at a low cost with little or no subsidy. And the third is the emergence of "SIM-only" prepaid service in which consumers can insert a prepaid-SIM card in an existing high-end smartphone that they purchased with subsidy but whose contract has expired.
"What we are seeing today is an almost perfect storm of factors that are making prepaid wireless increasingly attractive for middle-class consumers," said Simon, a senior fellow at the New Millennium Research Council. "When you combine the ongoing expense and rigidity of contract-based wireless service with the sluggish economy, the rise of unlimited prepaid calling, texting and web access, and the availability of more and more low-cost prepaid smartphone handsets, it becomes increasingly difficult for any savvy consumer to justify sticking with contract-based cellphone service." Prepaidonline.com offers refills for all prepaid wireless carriers.
More prepaid wireless companies are lining up to offer a full menu of smart phones including the i-phone as they all are now realizing how big the prepaid market has evoloved and how prepaid users are demanding more handset options. Cricket, Virgin, Simple, Boost, Tracfone and others are joining in. No matter who you choose, http://www.prepaidonline.com offers airtime/data refills for them all.
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