Worst of the Week: Prepaid apes

Hello! And welcome to our Friday column, Worst of the Week. There’s a lot of nutty stuff that goes on in this industry, so this column is a chance for us at RCRWireless.com to rant and rave about whatever rubs us the wrong way. We hope you enjoy it!
And without further ado:
So, word on the street is that the mobile industry is going prepaid crazy. This new track has been highlighted by the dearth of new postpaid customers signing up for wireless services, and those that are signing contracts look to be just switching from another carrier.
In response, just about all carriers have over the past six months gone ape-poop in rolling out or creating new prepaid options for customers that allow them nearly all the perks of postpaid plans without having to go through a pesky credit check – always painful unless conducted by a trained professional – or committing to remain loyal to their carrier for 24 months no matter how poorly they are treated or face a break-up fee. (Nothing says “I really respect you as a customer” than swinging a cancellation fee over your head to make you stay loyal.)
Any sane person would look at these options and realize that signing a contract is for suckers and the only real option is to go prepaid. (Thus my decision to recently re-up some members of my family on new contracts. Hey, I got a degree in journalism, not reasoning.)
This rush to cater to those customers that have either by choice decided that they don’t want to commit to one carrier for 730 days or by circumstance do not possess the credit “number” that backs up their signature is fascinating to watch.
In one corner there are Sprint Nextel and T-Mobile USA, the nation’s No. 3 and No. 4 largest carriers that while nationwide in scope have failed to keep pace with the customer growth and free-spending nature of their larger rivals Verizon Wireless and AT&T Mobility. Thus, these two have been forced to try to attract the “underserved” population of consumers looking for prepaid service.
Sprint Nextel has indeed been the most aggressive as of late now offering four different ways to get customers on its network without being forced by a contract to stay. T-Mobile USA on the other hand has kept its prepaid offerings fairly simple, though to what I can only assume is the consternation of current contract customers is offering a better monthly value to those selecting prepaid.
In another corner you have the traditional no-contract carriers in MetroPCS and Leap/Cricket that continue to pound their heads against the wall in trying to remain a viable presence in the eyes of consumers, trading network scope for more features on calling plans. This trade off seems to be holding as both carriers announced solid first quarter growth numbers, though the financial future of their offerings is still suspect.
All of these carriers that have changed their focus, or continue to focus on prepaid are also forced to balance out consumers’ desires to pay as little as possible for a phone (preferably a feature-packed smartphone that provides more capabilities than a Cray supercomputer for the low, low price of on the house) with the fact that without a contract there is no guarantee they will ever receive enough revenue in return to pay back a subsidy offered on a device. This has forced most of these carriers to charge a premium (or in effect, the real price) for mobile devices.
These carriers also don’t seem to mind the “negative” connotations long held by the mobile industry of who prepaid customers are, and I say good for them.
In the meantime, the industry’s heavyweights Verizon Wireless and AT&T Mobility remain on the sideline of this prepaid battle choosing to instead offer token no-contract services that look compelling when compared with their postpaid offerings, but fall flat when stacked up against the prepaid competition. Or at best they are keeping offers that run on their networks, like offerings from Tracfone, at arm’s length in an attempt to keep investors worried about the possible financial impact that prepaid can have on a carrier’s bottom line. And they seem happy to do so.
I liken this mentality to people that decide to cover up their tattoos or remove any visible piercings before heading into the country club for fear they may give the wrong impression.
This divergent view of how to deal with prepaid is sure to mutate over time, especially with carriers looking to push data services that seem to provide further confusion as to how carriers want to differ their marketing of prepaid and postpaid services.
So, where does this leave us? Well, to me it would seem to leave the wireless industry in some sort of mixed up, nether world. Prepaid is definitely where the growth seems to be coming from and this is the area that carriers more interested in showing growth to their shareholders than bottom line profits are heading. On the other hand, the current financial metrics of prepaid have left those carriers more interested in keeping the investors happy with higher margins on the outside of the prepaid battle.
My suggestion for clarifying these divergent paths. More commercials touting coverage and network speeds, maybe mixed with more apes. There is nothing like a diversion to make everything seem better.
OK, enough of that.
Thanks for checking out this week’s Worst of the Week column. And now for some extras:
–In the some-number-of-degrees-of-separation bin, those wacky folks over at ChaCha recently put out the results of a survey showing that – you may want to sit down for this – teens like to text. (Cliffhanger. And cut to commercial.) The survey results showed that in a survey – that relied on text messaging to gather responses – more than two-thirds of those respondents that claimed to be teens or young adults – or really old toddlers – said text messaging was their favorite way to communicate. This is nothing new to anyone that has seen a roving pack of teens – or young adults or very old toddlers – in which nearly every member of that heard is looking down at their cellphone while standing in the middle of a group of what are supposed to be their friends.
While the most popular form of communication was not a surprise, the shocking numbers from the survey was the .29% that selected e-mail (has e-mail already jumped the shark?) and the 1.24% that selected “other.” Since the survey included choices that seemed to include just about every form of communication I can only assume that the “other” category had to include mental telepathy and sky writing.
I welcome your comments. Please send me an e-mail at dmeyer@ardenmediaco.com.