Thursday, April 22, 2010

Pre Versus Post Paid

AT&T had their earnings reported yesterday. Verizon was up today. For which camp you're in for a second. Both wireless providers, while reported good wireless revenues, there was talk about new prepaid and post-paid subscribers. Apparently, it's the post paid folks that the wireless providers want. It's what Wall Street wants.

Post-paid are worth more. They're the subscribers who sign long-term contacts. That means they're almost guarantee to provide longer term revenue. Plus, they tend to sign up for extra services like wireless Internet access (like iPhone and Android users force to accept wireless access as part of their service) or SMS.

Now, prepaid users pay up front but they can leave anything they want. No more to say about that. And more folks may opt for this type of service as the phones become cheaper. Even smart phones or mobile devices, I see people spending $300-400 on a mobile device if it means they're not locked into a 24-month long contract.

So as pool of what I call "free agents", people with no contracts, shrink, wireless providers are forced to look for new sources of revenue elsewhere. Sprint, At&T, and others are providing devices like the Kindle and Nook with 3G service as a source of revenue.

The industry is in for a huge change as devices become cheaper and Internet services get cheaper. Competition will heat up as the providers fight for our business as the pool of available subscribers gets smaller.

Note: it was anticipated that the post paid numbers from AT&T and Verizon Wireless would be bad. It means numbers from Sprint and T-Mobile aren't going to be encouraging for the wireless industry.

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