| Prepaid Wireless: No Contract, No Credit Check, No Commitment
By Allan
Keiter
One
of the fastest growing areas
in wireless is the prepaid
plan. Historically, prepaid
had high rates, limiting its
appeal to those without the
credit quality to qualify for
a contract. Over the past year,
however, rates have fallen,
and prepaid has become attractive
to a number of new segments.
Prepaid service
is offered by most of the major
national carriers, and numerous
resellers, such as Virgin Mobile
USA. This latter group tends
to target a specific customer
segment, interacting with consumers
in the same way as a traditional
carrier does --- except the
calls made travel over the
network of a carrier from which
the reseller has purchased
airtime (e.g., Sprint, in the
case of Virgin Mobile). The
reseller market is growing,
with new services such as Mobile
ESPN (for sports fans) and
Movida (Hispanics) rolling
out.
Prepaid makes sense for
several audiences, including
those who
. refuse to sign a contract;
. have credit issues,
. are on a strict budget,
. only need wireless for emergency
purposes.
This last group is
underserved by traditional
postpaid wireless plans, as
it is getting harder to find
one of those under $39.99.
With prepaid, it is possible
to have wireless service for under $10 a month. For more on this, visit Cell
Phones for Emergency Use.
There are basically two types of prepaid service. To
see the options for a particular
location, visit the MyRatePlan Prepaid Wireless page.
. In Traditional Prepaid, the consumer buys a phone, adding airtime as needed.
The 'catch' is that the minutes expire if not used in a certain period of time,
although that period rolls over if more time is purchased before the card expires.
. Hybrid Prepaid is more like
a traditional wireless plan.
The user selects plan for a
certain price, and is billed
that amount each month until
cancellation. The balance available
is reduced by phone calls and other charges (e.g., directory assistance). If
the balance is used up, the customer can either buy additional time, or wait
until the start of the next billing cycle to use their phone.
Prepaid rates
have fallen, but remain higher
than postpaid. Additionally,
phone prices tend to be much
higher, as their cost is less subsidized. This occurs because, with no contract,
there is more financial risk to the carrier. Therefore, for most people not
falling into one of the categories mentioned earlier, postpaid service will
prove more cost-effective over the longer term.
Allan
Keiter is president of MyRatePlan.com.
Founded in 1999, MyRatePlan
offers unbiased content,
filters and calculators
to help consumers make
more informed decisions
about the products and
services they research
and buy online.
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