Back in March, we reported that the current recession period continues to boost prepaid wireless subscriber growth: IDC Research found that nearly two-thirds of U.S. net subscriber additions in the fourth quarter of 2009 were prepaid (see Strong Prepaid Demand).

It seems that people are “getting over” whatever barriers previously kept them from getting a prepaid plan. Traditionally, the biggest knock against prepaid was that you couldn’t get a top-of-the-line handset or smartphone on a prepaid plan. For example, in January 2009, we ran an article listing common misnomers about prepaid, which included: basic handset models, bad reception, and no voicemail or text messaging (see Prepaid in Q1 2009).

Meanwhile, the typical knock against smartphones was that you couldn’t get an affordable data plan.

More Smartphones Come to Prepaid

Now, as Marguerite Reardon of CNET News reported (May 19), more smartphones have become available on prepaid plans, thereby representing a major symbiotic development for both markets (i.e. the smartphone market and the prepaid market). Now, formerly reluctant customers can jump right in and get a quality device with an affordable plan.

“Boost Mobile and MetroPCS have already been offering smartphones as part of their prepaid wireless plans,” wrote Reardon. “And over the next several months, other competitors, such as Leap Wireless’ Cricket brand and Virgin Mobile will be adding smartphones to their lineups.”

Reardon quotes Neil Lindsay, Sprint’s chief marketing officer for prepaid products, who says, “Adding smartphones means that prepaid is no longer a compromised offering. Now we will be able to offer a range of products and applications that customers want, so we can compete better with traditional postpaid services.”

Prepaid Smartphones Available (or soon to be available) in 2010

• Cricket (owned by Leap Wireless): BlackBerry Curve 8530 and Kyocera Zio Android phone
• MetroPCS: BlackBerry Curve 8330 and Samsung Code
• Boost Mobile (Sprint Nextel): BlackBerry Curve 8330
• Virgin Mobile (Sprint Nextel): BlackBerry Curve 8530

Reardon says that the only downside to these phones is they are not subsidized, so the initial retail price is higher than with a contract: between $250 and $350, unless offered in a promotion.

Not Offering Prepaid: Verizon Wireless and AT&T Mobility

Not all carriers are keen on entering the prepaid price war, however, as RCR Wireless’ Dan Meyer reported (May 19). “The nation’s two largest operators, Verizon Wireless and AT&T Mobility, are content to sit on the sidelines of (the) increasingly competitive (prepaid market), at least for now.”

Meyer quotes John Killian, Verizon’s EVP and CFO, who says the company is watching the prepaid market but notes that its own postpaid base has suffered little. Killian adds that Verizon is more concerned with other postpaid carriers luring postpaid subscribers away from Verizon – which is what the iPhone has done for AT&T to a certain extent (see AT&T's Exclusive iPhone Deal).

Meyer also quotes Ralph de la Vega, AT&T’s president and CEO, who says the company is more interested in postpaid data revenue than prepaid voice revenue – which doesn’t address the arrival of more smartphones on prepaid plans.

Proposed Bill Would Require I.D. to Buy a Prepaid Phone

In a move indicative of the prepaid market’s increased significance, a bipartisan pair of U.S. Senate leaders have introduced a first-of-its-kind bill aimed at stopping terrorist suspects from concealing their identities by using prepaid cellphones to plot their attacks, wrote Ellen Nakashima of the Washington Post (May 26).

“The legislation would require buyers to present identification when purchasing a prepaid cellphone and require phone companies to keep the information on file, as they do with users of landline phones and subscription-based cellphones,” she wrote.

Note: iQmetrix has made selling prepaid cellphone credit easier than ever. RQ4 features an integrated e-pins solution, allowing you to sell prepaid in one simple process, eliminate theft and better manage prepaid inventory. Contact iQmetrix Value-Added Services at valueadd@iqmetrix.com or 1.888.472.6985 for more information.

- newsletter@iQmetrix.com

* To read more about The Demand for Prepaid, check out the following articles from iQmetrix News & Views:

IDC: Prepaid Demand to Remain Strong

Prepaid, Unlimited Price War Continues

How to Pitch Prepaid to Your Customers

Sprint Launches $70 Unlimited Mobile-to-Mobile Plan

Sue Marek: Is Prepaid Unlimited Market Saturated?