Report: Prepaid growth to outpace postpaid additions

Prepaid subscriber growth is set to outpace postpaid growth for the first time ever this year, according to analysts surveyed by the Associated Press. The economic recession, combined with the proliferation of unlimited plans around the $50 price point has made prepaid a more attractive offering than before, and it is contributing to a change in the composition of carriers' subscriber bases.

Since Sprint Nextel's Boost Mobile prepaid unit launched its $50 a month unlimited talk, text and web surfing plan in January (in response to market pressure from flat-rate regional carriers Leap Wireless and MetroPCS), T-Mobile USA has unveiled a $50 per month unlimited talking plan for select, longtime customers and Virgin Mobile USA has slashed the price of its unlimited calling plan from $80 to $50. And the new plan may be paying off for Boost, according to the report; since the introduction of the plan, Boost has scored six new users for every one that switched to another carrier.

The Boost plan drew a sharp rebuke recently from Verizon Communications CEO Ivan Seidenberg, who hinted that Sprint would not have the network capacity to handle the increased traffic, and would suffer because of the plan. "I don't know what Sprint thinks it is," he said in an interview with the Wall Street Journal. Sprint contends it has the network capacity to handle increased traffic.

Indeed, it may be Verizon, AT&T and the other Tier 1 carriers that suffer in the first quarter. Faced with a smaller pool of postpaid subscribers to draw from, analysts surveyed by the AP said they expect the four major wireless carriers to add just 1 million postpaid subscribers combined for the first quarter, a number that would be much lower than previous quarters.

For more:
- see this AP article [1]

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