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Prepaid Wireless Has Finally Grown Up

By Jeff Kagan
Mar 24, 2011 5:00 AM PT

Have you taken a look at prepaid wireless lately? I hadn't, since there is always so much noise to follow in the postpaid world and prepaid is relatively quiet, but prepaid is actually looking better and better over the last few years.

Prepaid Wireless Has Finally Grown Up

prepaid is becoming a mainstream part of the mix you should consider. In fact, it is now even better than traditional wireless for a growing percentage of users. Is it better for you? You may be surprised.

At the end of this column I will talk about how tablet and pad computers are beginning to change the healthcare industry from doctors to hospitals and more.

A Better Rate

We always think the first option should be a traditional postpaid cellphone. And for many years that was the best first choice. In the early days, prepaid was more expensive. Its claim to fame was it gave those with a poor credit rating a chance to go wireless, but at a higher cost.

Ever since, there has been a group of smaller companies that have been transforming this space. Companies like Tracfone and MetroPCS are actually doing strong business, and not just for the credit-challenged anymore. Now this service is right for tens of millions of customers who just want to save money.

Traditional postpaid wireless phone service is excellent, but it's also getting very expensive. When you add voice, text, email and the Web, your bills are around $100, give or take a little depending on the carrier.

Today both AT&T Mobility and Verizon Wireless are the most expensive. Sprint Nextel costs less but is still more than the smaller competitors.

The general rule is, the smaller or lesser known the company, the better deal they have to offer. Otherwise customers would buy from the big brand-name companies who spend billions advertising and marketing.

The Best Deal in Town?

All the majors offer a prepaid service, which can cost less than postpaid and have no long-term commitment. However, these cost more than others.

Smaller companies like Cellular South and US Cellular often charge less for the same good-quality service.

However the lesser-known prepaid carriers are suddenly providing the same valuable service, on the same network connection, with the same quality and network reach, at a much lower cost.

These prepaid services traditionally offered only the plain-Jane handsets, but they are increasingly offering more sophisticated devices that do everything many people need without all the extras that you may not use, but still have to pay for.

Wouldn't it make sense to have a handset that did what you needed, without having to pay for all the other features you never use?

I started looking at these and was both delighted and surprised at how much this prepaid industry segment has matured and gotten better. Do you want a second phone? Or what about a primary phone that just costs less?

These handsets are not expensive and there is no long-term commitment. You simply continue as long as you want and you can cancel whenever you want.

MetroPCS operates their own network, so I am not sure how good their coverage is, but they are a major player in this prepaid segment and continue to grow.

Tracfone I understand re-sells AT&T Mobility and Verizon Wireless networks. That's right. The coverage is the same as either network. Tracfone says in their ads the coverage for every user is better than with either AT&T or Verizon separately. I am not sure about that. If each device uses both networks, then that is true. However if each device uses only one or the other, then it is not true. In that case the service should be the same as either AT&T or Verizon. Still a great choice.

Models and Plans

Besides that, the devices are solid, but more basic than the super smartphones like the Apple iPhone or a typical Android. They do email and text messaging and access the Web.

There are a large variety of plans to choose from. There are unlimited plans for voice and Web and text, and the cost is much less than the majors. Depending on the network, you can get unlimited for as low as $45 per month. Compare that to close to $100 from the majors.

On the other end, if you seldom use the phone but still need one, you can get the monthly service for free and just pay per minute. That's right -- if you don't use it you don't pay for it, but still have it just in case. And there are many plans to choose from in between depending on your needs.

Tracfone also operates other prepaid services like Net 10 and StraightTalk, depending on the type device you want and how much you will use it. StraightTalk is their top-of-the-line service offering the best phones and quite possibly the lowest price on an unlimited plan. They also operate two other services called "Safelink Wireless" and "Senior Value Cellphone."

Compare this to AT&T, Verizon and Sprint prepaid service, which charges $2 per day for unlimited voice and text. Email and Web costs more. If you don't use the phone that month, the cost is zero. If you do use it, the most it will cost is about $60 per month, but remember there is no Internet connection or email at that price.

Another innovative idea is i wireless, which is a new type of wireless company that does business with Kroger grocery stores. This uses the Sprint Nextel network and offers low prices that save quite a bit from the traditional AT&T, Verizon or Sprint. They also offer extra discounts when you shop at Kroger, which makes it even better.

I expect to see this partnership segment really start to grow rapidly over the next few years, so they may have some new competition getting ready to start. It is good for the companies and the customers.

There's a growing number of these prepaid services in markets around the country, large and small. I am trying a few of these and they seem to offer good quality service, at a lower price and with no long-term commitments.

Smarter Selection

OK, so this prepaid segment is looking better and better. Will this threaten the majors? Not likely. Many people are interested in the brand names and the top-end devices like the Apple iPhone or the latest Android. Most of their prepaid carriers don't offer real smartphones yet, but they do offer better smartphones than last year, and they keep getting smarter.

I have noticed i wireless is offering a Sanyo Android device, the same one Sprint Nextel offers. Could this mean we'll start to see more of these super smartphones available on prepaid services? I think so. That's the direction we are heading in.

There seems to be a line being drawn down the middle of the marketplace. Some customers want the super-powered smartphones and other customers want to save money, but still get the same kind of quality and reliable service.

So as this prepaid market continues to grow and get better and act more like the traditional side, the phones and devices will get better and stronger. The prices continue to be less than traditional wireless, and you don't get locked into long-term contracts. What could be better than that?
Jeff Kagan's Pick of the Week

Pads and tablet computers are starting to catch on in healthcare. John Halamka, the CIO at Beth Israel Deaconess Medical Center says the iPad will change the way doctors practice medicine. This is right on target. But this is not just about the Apple iPad; the entire pad and tablet computer industry will rapidly grow into this segment.

This is the early days of an enormous healthcare technology revolution, and this is just one slice of a growing pie. Each new version will be lighter, more powerful and do more than the last.

Not only devices like these computers, but also new apps and software for the healthcare community are starting to emerge. This is becoming a very exciting time indeed. Not only do these devices turn on and off quickly, but the cameras will start to be used for all sorts of things like imaging and radiology apps.

This is the start of an entirely new and very exciting market segment that will impact companies you already know and many you don't -- companies like Apple (iPad), Research In Motion (Playbook), Motorola (Xoom), Lenovo, HP (Slate), Dell (Streak), Samsung (Galaxy), Fujitsu (Slate), Sylvania(MID tablet), Augen, Archos, ViewSonic, Coby, Boss, Ican, Nextbook, Maylong (Universe) and many more.

We have been paying lots of attention to this brand-new sector, but these devices and software are getting ready to transform many industries, like health care.

Jeff Kagan is an E-Commerce Times columnist and industry analyst following wireless, telecom and healthcare technology. He is also an author, speaker and consultant. Email him at jeff@jeffKAGAN.com. Read the first chapters of his new book Life After Stroke now available at Amazon.com and Barnes & Noble.

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