Verizon Wireless (NYSE:VZ) appears keen to juice its prepaid smartphone sales during the holiday shopping season. The carrier earlier this week launched a double data promotion that will increase the data allotment on its $80 prepaid smartphone plan from 1 GB per month to 2 GB.
Verizon launched its double data promotion earlier this week.
The promotion is available to new customers who purchase 3G CDMA smartphones (it doesn't cover LTE phones) and runs through Jan. 31. The carrier's $80 per month prepaid smartphone plan offers unlimited talk, text and--via the promotion--2 GB of data. Customers who travel over the 2 GB allotment can buy an additional 1 GB for $20 or can pay 5 cents per MB.
Customers can keep the 2 GB promotional rate as long as they renew their contract every month.
"Verizon Wireless seems to be building up to drive Q4 2012 and Q1 2012 prepaid net additions," wrote Bill Ho, an independent industry analyst who first pointed out the plans. "Coming off a decent prepaid Q3 with 228K net additions, the prepaid group looks to better 2011 Q4's 250K net additions."
Ho said Verizon's double data promotion will help the carrier drive prepaid net additions and fill its 3G network with "high-value users." He also noted the offering could help Verizon capture subscribers who want to switch from a postpaid contract to a prepaid model.
Indeed, Verizon could be reacting to a growing push among wireless users toward prepaid services from the nation's smaller wireless carriers. NPD Group recently noted that 70 percent of prepaid smartphone buyers in the third quarter switched from a Tier 1 carrier to a smaller provider like MetroPCS (NYSE:PCS) or Sprint Nextel's (NYSE:S) prepaid brands, Boost Mobile and Virgin Mobile. NPD also found that the overall penetration of prepaid smartphones rose from 39 percent in the second quarter to 42 percent in the third quarter.
Ho also noted that Verizon's $80 per month plan remains far more expensive than plans from its competitors. For example, AT&T Mobility (NYSE:T) in October reduced the price of its own unlimited talk and text prepaid smartphone plan from $75 to $65. AT&T's plan offers 1 GB of data.
And smaller players offer prepaid smartphone plans at even lower prices. For example, T-Mobile USA, Boost Mobile, Leap Wireless (NASDAQ:LEAP) and others offer unlimited talking, texting and a bucket of data for $50 or less per month--far cheaper than the $80 Verizon charges.
This isn't the first time Verizon has offered a double data promotion. The carrier previously ran a major promotion that doubled the data allotment of subscribers who signed up for its postpaid LTE smartphone plans. Verizon ran that promotion twice: once in 2011 and once again earlier this year. The goal of that promotion was to encourage subscribers to move from Verizon's 3G network and onto its LTE network. Now, the carrier appears to be using a double data promotion to increase sales of its 3G prepaid smartphones.
Interestingly, Verizon isn't the only carrier to offer a double data promotion: Page Plus Cellular earlier this year doubled the amount of data on its $55 per month plan (which includes unlimited texting and talking) from 1 GB to 2 GB per month.
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