The battle for wireless customers between the industry’s No. 1 operator Cingular Wireless L.L.C. and No. 2 Verizon Wireless is set to move into the rapidly expanding hybrid-plan market segment. Hybrid plans generally merge calling-minute buckets associated with lucrative postpaid plans with the no-contract hassle of more fiscally challenging prepaid offerings.
The market is seen by many analysts as a profitable way for carriers to reach underpenetrated customer segments and can bridge the gap between traditional postpaid customers who typically generate between $50 and $60 per month in average revenue per user and prepaid customers who generate between $15 and $20 per month in ARPU.
A recent consumer survey from The Yankee Group found that teens selecting hybrid plans will jump 63 percent from 2.1 million in 2004 to 3.4 million this year. The hybrid growth among teens will dwarf an expected 38-percent increase in family-plan adoption and a 38-percent drop in traditional postpaid adoption by teens this year.
Looking to tap into that growth, Verizon Wireless last week launched its EasyPay plan, which analysts noted is similar to Cingular’s GoPhone hybrid plans. Both plans allow customers to receive buckets of calling minutes each month that can be paid for using either cash, credit cards or debit cards.
“We recognize the wireless service isn’t a one-size-fits-all product,” explained Bill Stone, Verizon Wireless vice president of marketing. “Customers have a multitude of preferences for how they want to pay for their wireless service. EasyPay plans meet the needs of customers who have a prepay lifestyle but want the benefits and features of postpay plans.”
Verizon Wireless’ plan includes two tiers, providing 350 anytime calling minutes for $50 per month or 700 anytime calling minutes for $70 per month. Both plans include unlimited in-network calling and unlimited night and weekend calling. Customers also can send or receive text messages for 10 cents per message.
Similarly priced America’s Choice postpaid plans from Verizon Wireless include 450 anytime minutes for $40 per month or 900 anytime calling minutes for $60 per month. Verizon Wireless’ America’s Choice plans also include unlimited in-network and night and weekend calling.
Analysts noted the EasyPay plan was an effective bridge between Verizon Wireless’ postpaid offerings and its underappreciated Inpulse traditional prepaid service.
“In the end, EasyPay fills a good niche for Verizon Wireless and will allow the carrier to go after a new type of customer who would not have considered the standard Inpulse prepaid service or signed a yearly service contract,” said Weston Henderek, senior wireless analyst at Current Analysis.
Verizon Wireless continues to offer its Inpulse service, which provides 10-cent-per-minute calling rates with a $1-per-day access fees.
Cingular’s GoPhone hybrid plans, which the carrier inherited from AT&T Wireless Services Inc. and recently relaunched with new features, offer twice as many pricing tiers as EasyPay. GoPhone begins with a $30 tier that provides 200 anytime minutes; moves up to a $40 tier that includes 300 anytime minutes plus 1,000 night and weekend calling minutes; extends to a $50 tier that includes 400 anytime minutes plus unlimited night and weekend calling minutes; and tops out at a $70 tier that includes 650 anytime minutes, unlimited night and weekend calling, and unlimited in-network calling.
GoPhone includes Cingular’s Rollover feature that allows customers to keep their unused calling minutes for up to a year.
Cingular also offers text messaging at 10 cents per message sent or received, as well as access to downloadable content and wireless Internet access at 1 cent per kilobyte sent or received. Verizon Wireless currently does not allow EasyPay customers access to its Get It Now downloadable content service or its high-speed Vcast service, though it will reportedly add GIN access by the end of the year.
Verizon Wireless’ EasyPay service trumps GoPhone in that it allows customers to select from any of Verizon Wireless’ handsets at the price available to postpaid customers selecting one-year contract agreements. The one-year contract price for handsets is typically $50 more than a two-year contract price.
Cingular’s GoPhone service is prepackaged with one of five low-tiered handsets, though customers can select any Cingular handset for the service at an unsubsidized price.
Sprint Corp. and T-Mobile USA Inc. have so far steered clear of hybrid plans in favor of more traditional prepaid offerings. Sprint has successfully managed its prepaid services through its Virgin Mobile USA L.L.C. mobile virtual network operator joint venture that serves more than 3 million customers, while T-Mobile USA’s refocused prepaid service accounted for 30 percent of the carrier’s net customer additions during the second quarter.
