Wednesday, August 31, 2011

Prepaid Cell Phones: A New Area Of ​​growth

Landscape of the mobile telephony market has shifted in recent years. Although the overall market for mobile phones grows, the traditional post-paid plans are shrinking share of total market. Contract plans are quickly replaced by a cheaper prepaid cellular phones.

Prepaid versus postpaid

Two general types of cell phone plans are prepaid and post-paid. When the prepaid card, you pay for minutes in advance. With a subscription, you pay for minutes at the end of each month. Post paid plans require a credit check and contract, because you pay for minutes after they are used.

Growth Statistics

The mobile phone market has increased every year since its inception, and the overall market continues to grow. United States, over 80% of the population use mobile phones. This trend continues to grow, albeit much more slowly now than in previous years.

Traditional phone contract plans are the primary cell niche within a niche market, and increased from year to year. However, in 2008, growth began to slow trend. From 2008 to 2009 net activations of postpaid customers of all major airlines fell by 58 percent. In 2009, the post-paid subscriber growth actually the opposite, and the market is declining.

Meanwhile, prepaid customers grew. In 2008, about 50 percent of new mobile users subscribed to a prepaid cell phone service. The following year, in 2009 was about 80 percent subscriber growth of prepaid phone plans.

Historically, prepaid phone plans has been used by two types of people: young people and people with bad credit. Because the traditional post paid plans require a credit check, many people were able to buy a traditional post-paid mobile phone. Traditionally, these people who have no credit or bad credit, most of the prepaid market. The only downside to prepaid plans, until recently, was that the prepaid cell phone plans have become more expensive than postpaid plans.

Prepayment is now cheaper

But a few years ago the price of prepaid began to descend. Now, prepaid cell phone plans are significantly less expensive than postpaid plans. Many carriers are now even pre-paid plans offer unlimited minutes that are less expensive than comparable plans that contract 500 minutes. The current low cost prepaid plans and the economic slowdown feeding the explosive growth of the market for prepaid mobile.

Of course, the majors cell phone are not happy with it, because they make more money on the contract terms that make it on prepay. There are three reasons for this. The first is that according to plans made are more expensive than prepaid plans. Traditional contract plans can run more than $ 80 per month, while a prepaid plan with the same record can be as cheap as $ 40. Second, not only the mobile phone companies more money in the contract, but they have a secure flow of recurring revenue by blocking its customers with long-term contracts. The third reason, according to plans made are so lucrative for the mobile phone companies that charge exorbitant fees if you exceed your allowance minutes, sometimes 25 or 50 cents per minute. This adds up very quickly and many people have accidentally run up huge cell phone bills of several hundred dollars.

Of course, the prepaid plans that do not have this problem. Prepaid plans are now cheaper per minute, and do not have contracts. Also, if you exceed the number of minutes that you have purchased, you can purchase minutes.

The future of cell phone plans

Plans cell phone contract remain popular among consumers, however. The main reason is that the devices they offer are cheaper, at least up front. Many consumers are choosing the contract plans, because they can not afford a $ 600 phone. The carriers will subsidize the price of the phone when the customer signs a contract for two years. In contrast, pre-paid phones are more expensive than the price is not subsidized. Consumers must pay the full price of prepaid phones. What consumers do not realize is that companies are able to subsidize the cost of the device, because they know that in this two-year contract will increase the cost of the phone (and much more.)

Prepaid plans are gaining market share, however. They just have more economic sense for consumers. The economy has been bad for years and no end in sight. The low total cost of prepaid cell phone plans will continue to grow in popularity and more consumers to choose plans prepaid plans traditional postpaid contracts.


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