Analysts See Prepaid Penetration Hitting 33 Percent In Year

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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 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.”


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