Verizon Wireless Launches High-End Prepaid Plans

Verizon Wireless Launches High-End Prepaid Plans

In the U.S., Verizon Wireless has announced that it is launching prepaid plans with unlimited talk and text, plus data ($60 a month for 500 MB, and $70 a month for 2 GB). These are available for smartphones using iOS, Android, or Blackberry operating systems.

Tarifica’s Take

A lot of analysts and pundits have been saying that growing consumer affluence, especially in emerging markets, will move ever growing numbers of prepaid subscribers into being postpaid. We don’t see that happening anytime soon. The weak worldwide economy will certainly slow down the trend away from prepaid, and it may well turn things in the opposite direction. Even in the most developed markets, such as the U.S., it is becoming harder for customers to commit to the recurring fees associated with long-term contracts. And many consumers who are willing to make that commitment are finding tighter credit conditions worldwide preventing them from doing so.

Prepaid will be a growing, as opposed to shrinking, piece of the telecom pie until the worldwide economic malaise has finally lifted. In fact, in developed markets we expect to see prepaid growing more rapidly than postpaid. As such, operators should increase, not decrease, the number and variety of prepaid plans they offer. These plans should also be tailored to maximize revenue, including the development of more high-end offers. Prepaid plans at higher price points might seem counterintuitive, but from our perspective such an approach makes perfect sense, as there are many prepaid subscribers who have the resources and willingness to pay high monthly fees, but not the credit or ability to commit to doing so over the long term. Properly structured, prepaid plans will boost both margins and profits as the number of such subscribers grows.