AT&T Wireless Services Inc. Chief Executive Officer Dan Hesse has consistently indicated one key to growing wireless market share is targeting the youth market. The carrier is hoping its new nationwide prepaid offering becomes a low-end version of its popular Digital One Rate plan and attracts a significant number of young people.
“Europe is growing market share because most carriers are successful at targeting the 18-to-24-year-old segment,” said AT&T Wireless Spokesman Ken Woo. “People in that segment are more willing to embrace technology.”
AT&T Wireless’ proprietary research indicates people ranging from 18 to 35 years old have more disposable income-about $300 to $400 more-than the Baby Boomer generation, said Woo.
AT&T Wireless’ new plan comes on the heals of Sprint PCS’ recent introduction of a nationwide prepaid-type service that assigns customers to a credit class of either $125 or $200 and allows them to sign up for any postpaid service offering. Once customers hit 80 percent of their limit, they are required to pay down the balance.
AT&T Wireless’ new prepaid plan includes roaming and long-distance service and eliminates services charges. Customers purchase an Ericsson LX700 multi-network handset that is ready to use out of the box and comes preloaded with 15 minutes of calling. Users also receive a 15-minute refill card plus a mail-in coupon good for another 60 minutes of airtime included with the handset.
Customers can add additional minutes to their phones by purchasing refill cards at all AT&T stores, participating retail locations or by calling an 800 number and using a credit card. Users can purchase denominations of 30, 60, 120 and 240 minutes. The cards expire after six months of non-use.
The specific per-minute rate a customer pays depends on the value of the refill card purchased, said AT&T Wireless. A customer who purchases the highest rate plan will receive the lowest per-minute rate-42 cents per minute for the 240-minute plan. Users paying for 30 minutes are charged 85 cents per minute.
While prepaid service has become an important tool for operators looking to push their services in other customer segments, a shift from marketing the service just to the credit-challenged has been slow moving. Carriers historically have gouged users with high per-minute rates and have limited customers from using the service outside their calling areas. These things need to change in order for prepaid service to reach significant penetration levels, warn analysts.
Though per-minute rates have decreased, they still have a long way to fall to match the postpaid airtime rates of around 10 cents per minute. AirTouch Cellular, Omnipoint Communications Inc. and PrimeCo Personal Communications L.P. charge among the lowest rates, according to a recent Yankee Group study. AirTouch, whose best per-minute rate is 35 cents, recently included long-distance service and extended its replenishment deadlines to six months. Its plan does not include roaming.
