Switching to a prepaid wireless provider is financially beneficial, but a few changes must happen before they can truly make a strong foothold. If you’re reading this, you’re hopefully already sold on the benefits of switching to prepaid, so I won’t elaborate them here. However, in the last several days as I’ve been promoting the site launch, I’ve had several questions about prepaid providers and what they offer, and I’ve discovered that the biggest challenge to prepaid’s lack of adoption boils down to a few critical points:
1) Multiple Line Offerings
The criticism I’ve heard most often comes from people with family plans. They understand the savings and benefits of switching to prepaid, but they’re currently on a multi-line plan with friends or family and ask how well the savings applies to them. The simple truth is that once you get beyond 3 or 4 lines, the cost savings diminish and may even be more expensive than a postpaid plan. Of course, this assumes you don’t place any inherent value on the intangible benefits of switching to prepaid, such as being able to switch carriers freely and having total control over your wireless service without being bound by a contract.
I know with almost certainty that if a prepaid provider started offering a multi-line option with a discount as small as $5 cheaper per month per additional line, several of my friends and family would switch today. TiVo does this right with their multi-service discount: for every TiVo service line in a household beyond the first, the service is discounted by approximately 25%. This makes the barrier to family adoption considerably lower, and there’s value to be had in the marketing potential too.
2) Prepaid Plan Variety
Some prepaid providers are better about this than others (Simple Mobile has the best variety with plans starting as low as $25 and as high as $50), but most prepaid providers offer one or two plans, and they’re usually directed at heavy smartphone users who benefit from a mostly unlimited plan.
For example, if Solavei expanded their offerings to include a plan for $35 per month and only 2 GB of high-speed 4G data instead of 4 GB, and reduced the unlimited minutes to a reasonable finite number, there would be (almost) no reason not to choose them over any other prepaid provider. Very few people need unlimited minutes and a high data allotment. Most people are one or the other.
3) Network Diversity
Straight Talk‘s biggest market advantage is their network diversity. They operate on top of both the T-Mobile and AT&T networks. As T-Mobile continues to refarm its existing network for compatibility with unlocked global and AT&T devices, this market advantage will diminish and the sole benefit of the network diversity will be coverage areas and network speeds, but for people trying to minimize the cost of switching to prepaid by keeping their existing devices, this is a big selling point for current AT&T customers switching to prepaid.
Similarly, current Verizon Wireless and Sprint customers are at a stronger disadvantage when switching to prepaid, since most prepaid providers utilize GSM networks instead of the mostly U.S.-centric CDMA. There are multiple reasons for this which are beyond the scope of this article, but with rare exception, Verizon Wireless and Sprint customers looking to make the switch to prepaid are forced to either purchase new devices (in addition to the high Early Termination Fee imposed by Verizon Wireless, if applicable), or switch to a prepaid offering which doesn’t really compete with the likes of Solavei and Straight Talk.
If you haven’t yet made the switch to prepaid, what’s holding you back?