Prepaid Wireless Tracker - January 2014 Issue #67

Hi,

Prepaid wireless is a growing and truly exciting industry.  At Prepaid-Wireless-Guide.com I try to provide you with in-depth information that isn't readily available anywhere else.  The content is original, and created from firsthand experience working in the prepaid wireless industry for over a decade.

This monthly email provides you with a quick glance at what's trending in the news so that you can easily keep informed.  I believe in brief, to-the-point summaries/commentary so that you can move onto other tasks in your day.  Each snippet includes a link to the original story should you be interested in the full details.

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2013 Was A Formidable Year For Prepaid Wireless!
This past year was certainly predictable, and played very much as I have been predicting.  Prepaid closed the handset quality gap, and now provides most of the latest and greatest handsets.  Price plans remained competitive, and coverage and service quality generally improved.  Device financing, and the move away from handset subsidies created quite a flurry of activity in the industry.  Most notably, the large carriers saw massive exodus from postpaid to prepaid, and finally got serious about prepaid as a critical source of future growth.  With that realization T-Mobile purchased MetroPCS, and AT&T launched AIO Wireless, followed later in the year with a move to replace AIO with a Cricket acquisition (expected to close in early 2014).  Both carriers and customers are no longer denying that the future is no contract, and in 2014 we will continue to see key strategic movements to support this fact!

Phone Unlocking Will Become The Norm
FierceMobileIT
The topic of unlocking has been a contentious one for many years.  According to this article, carriers are open to the idea so long as postpaid customers pay full price for their phones, and prepaid customers maintain service with the carrier for at least one year before the unlock code is provided.  The reality is that carriers have not historically provided unlock codes due to the fact that they've invested heavily in phone subsidies, and can't have customers leaving  for another carrier before they recoup their investment.

In addition, it's not only about breaking even, but earning a healthy profit, which is typically at least 40%.  Despite our instinctual objections, requiring customers to pay full price before providing unlock codes is certainly fair.  The future really is foreshadowing a zero subsidy model where customers must pay full price for our phones.  When wireless was not considered as essential as it is now, enticing customers to sign up with more affordable out-the-door prices made a lot of sense.  This is not longer the case as wireless penetration exceeds 90%.  Phone financing as a separate service really makes a lot more sense than heavily subsidizing phones where customers are wholly unaware, or at least unappreciative; it's a model that is no longer sustainable, nor needed.

T-Mobile Offers Free Unlimited Facebook Without Data Plan Required
Next iPhone News
Prepaid GoSmart customers now get free unlimited access to Facebook.  The catch is that it's on their 2G network, meaning that images will load slowly, and videos will be pathetically slow.  The objective is to get you to buy up to a faster data plan after you get hooked on the convenience and fun of having mobile access to Facebook.  It really is a great strategy, however, it could backfire if the experience is so poor that people simply discontinue using it, not understanding that the experience will be much better with a decent data connection.

It will be interesting to see how this unfolds; apparently it's doing well in other countries.  Ultimately, I expect that T-Mobile will shift the program to 3G access with the upgrade path to 4G, which will yield a much better customer experience.  The future really is ad-supported access, meaning that you'll get free access by permitting personal ads to be displayed, as well as a flat monthly access fee for a particular service or bundle of services.  For example, $2.99 per month for unlimited Facebook access, with the objective of not having customers worry about how much data they're consuming, and ultimately becoming more dependent on mobile applications that translates into additional purchases.  Profitability will of course be the key, so look out for a lot of experimentation in this area in the coming year.

E911 Tax Comes To Prepaid Wireless
Maple Valley Reporter
Starting today prepaid wireless customers will be charged an extra dollar each time we make a topup purchase at retail.  It took some time for postpaid wireless to adopt this tax as government came to realize that 911 funds were quickly dwindling as customers moved from landlines to wireless.  Historically prepaid was so small that it was overlooked (or at least ignored), however, now that it's set to out pace postpaid, the authorities need to ensure that funds continue to flow as needed.  So while this is disappointing news, it's a necessary evil.  Keep in mind that since it's a per transaction fee, you're better off topping up more per transaction, otherwise the fee will become proportionally quite large.  For example, a $1 fee on a $5 topup is 20%!

Revol Goes Under - Shuts Down Service This Month
FierceWireless
Revol announced that it will discontinue service on Jan 16th; i.e. the company is bankrupt!  This really shouldn't come as a surprise, and we will continue to see regional players throw in the towel over the next year.  Competition and operating expense in wireless in general, and even more so for prepaid wireless, is severe.  Smaller carriers must have a strong, and unique value proposition to really attract customers.  Otherwise it really comes down to a commodity service.  Revol customers who didn't take up the free phone plus free month of service offer to convert to Boost, which expired December 24th, should start considering your options now.  If you do want to go with Boost, I would recommend reaching out to them even though you missed the deadline, as there's a good chance they'll still provide some kind of offer.

T-Mobile Shook Things Up With Their 2013 Fight & It Paid Off
FierceWireless
This is a fantastic article that provides a great summary of not only T-Mobile, but all of the major carriers and how they've been performing.  T-Mobile is specifically called out due to their large efforts in 2013 to optimize customer value, as well as the introduction of device financing, and other services that align with their new "uncarrier" strategy.  Despite being the smallest of the four major U.S. carriers, T-Mobile's efforts created ripples in the industry that resulted in reactive financing programs and other plan adjustments by not only competitors like Cricket, but also more formidable players like AT&T.


What's New At Prepaid-Wireless-Guide.com?
Refreshing, consolidating, and simplifying content across the site to optimize the visitor experience continued this past month.  With many hundreds of pages, this process takes time.  If you enjoy the site, the most valuable thing you can do to help is to share it on Facebook, Twitter, and Google+, as social presence is becoming an increasingly important factor for search engine rankings.  Thank you in advance!


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Cheers!
PrepaidWirelessGuy