Alltel Corp. is revamping its prepaid service to try to profit from recent trends. As the U.S. postpaid wireless market saturates, fourth-quarter results showed most carriers, including Alltel, registered a heavier prepaid and reseller mix among newly added customers.
The country’s fifth-largest carrier introduced its “U” prepaid service, which offers customers the option to pay per minute, per day or per month. While the pay-per-minute and per-month plans had been offered previously, the pay-per-day plans are new, and the launch of U signals Alltel’s recognition that future customer growth for wireless carriers increasingly will come by making inroads in the prepaid market.
“[Prepaid] hasn’t necessarily been a focus, historically,” said Brian Taylor, director of prepaid wireless marketing for Alltel. “A lot of that was due to the fact that we really didn’t see it as a growing market opportunity until really in the last 12 months.”
In its fourth quarter, Alltel added 147,000 net new wireless customers. Within its heritage markets, Alltel added 166,000 customers, 76,000 of which were postpaid and 90,000 of which were prepaid, representing 54 percent of those additions. At Alltel’s analyst day in New York, Kevin Beebe, group president of operations for Alltel, noted that the company’s postpaid adds alone exceed what most analysts expected the company to add in total, and emphasized that while Alltel was putting more energy into prepaid, the company was not giving up on postpaid growth.
Alltel’s U pay per day plan costs users a 75 cent per day access fee, with wireless minutes charged at 10 cents each. Cingular Wireless L.L.C. and Verizon Wireless charge a $1 per day access fee for prepaid users to get a 10 cent per-minute rate. Alltel’s per-day rate also allows customer to select two options from unlimited nights and weekends, unlimited text messaging, unlimited mobile-to-mobile, or unlimited calls to a designated “favorite number.” Customers can add additional unlimited options for 25 cents per day each, or $1.25 per day for all the options.
Competing prepaid offers, Taylor said, “definitely don’t offer the same customization aspect that we do. We think that customers will enjoy being able to build their own plans.”
Alltel’s service requires a $35 activation fee, and allows users to download games, ringtones and wallpapers.
Taylor said the revamped prepaid offerings is “a reaction to a growing prepaid market” and that Alltel wants to use the prepaid plans as a way to snag young users who then might continue to use Alltel for wireless service when they move up to the postpaid market. “We expect some additional benefits as far as selling more prepaid units, but our biggest focus is on a better customer experience so that they’ll stay with us longer,” Taylor said.
The U service is available in Alltel retail stores and through the carrier’s customer service centers; it is not yet available for order through the carrier’s Web site, though customers can replenish their accounts online. Alltel also continues to offer its Simple Freedom prepaid service, which is available through Wal-Mart and K-mart stores. According to Beebe, most of Alltel’s prepaid customer adds in the fourth quarter came through Wal-Mart, after Alltel added a second handset to its Simple Freedom lineup in the third quarter.
