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Analysts See Prepaid Penetration Hitting 33 Percent In Year


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 contend.

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 low-cost 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

“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.”