Monthly service plans gain popularity among prepaid customers

Almost half of all prepaid wireless customers in the United States are on recurring monthly service plans, according to a new survey from J.D. Power and Associates. The survey found that the pay-as-you-go option among prepaid providers continues to fall in popularity among customers.
The firm notes that plans in the non-contract segment have changed dramatically during the past several years. In 2008, less than 30% of prepaid customers were on monthly plans. Today, that group sits at 49% of the entire prepaid segment, marking more than a 50% jump from three years ago.
“Historically, the most common type of non-contract plan was characterized as pay-as-you-go, but several carriers have increased their offerings to include plans that mimic traditional contract plans without requiring customers to sign contracts,” Kirk Parsons, senior director of wireless services at J.D. Power and Associates, said in a prepared statement. “This particular service offering has become very popular, especially during the tough economic times. The appeal is based on lower cost of service, particularly when compared with contract-based offerings with similar service and product offerings.”
The firm also found that the growth in monthly plans can be partly attributed to cost savings and improved overall satisfaction among existing customers.
“As the non-contract wireless market continues to evolve, consumers need to explore all of the alternatives available to them in order to determine which plan suits their needs,” Parsons added. “With an increased breadth of options, wireless customers will likely find a plan that optimizes their wireless experience and meets their budget without requiring them to sign a long-term service contract. This may, in turn, benefit wireless providers with a robust segment of new customers with which to grow their business and increase service fee potential.”
Sprint Nextel Corp.’s subsidiary Boost Mobile ranked the highest in overall customer satisfaction among non-contract wireless customers. MetroPCS Communications Inc., TracFone Wireless Inc., Net10, Virgin Mobile (another Sprint subsidiary) and T-Mobile USA Inc. also ranked above the industry average in terms of customer satisfaction.
Finally, J.D. Power and Associates found that the average pay-as-you-go customer spends $37 on each airtime purchase, a $2 jump from 2010; and monthly non-contract customers spend an average of $32 less per month than customers with contracts, spending $60 per month compared to the monthly average cost of $92 for customers with contracts. Non-contract customers use an average of 326 minutes per month, pay-as-you-go customers use 180 minutes per month and monthly non-contract customers use an average of 489 minutes per month. Moreover, 38% of customers currently under contract who say they are likely to switch their carrier during the next year plan to choose a non-contract service.