PrepaYd Wireless Out Of Business

by PrepaidWirelessGuy

PrepaYd Wireless was a Sprint MVNO, meaning that they operated on the Sprint network. In mid-February 2014, PrepaYd apparently gave its dealers only a few hours of notice that they were going to shut down. This meant that no new customers could be activated, existing customers who recently added funds would not get the full service that they paid for, and there was even limited time to port out phone numbers to ensure customers at least didn't lose out on keeping their number.

So what happened that lead to PrepaYd Wireless going out of business? In its note to its dealers, PrepaYd stated that Sprint terminated its MVNO Agreement. As an MVNO, wireless companies own and operate everything except the wireless network and customer billing systems. Thus, once an MVNO Agreement is terminated, the company basically disappears overnight. So why would Sprint terminate their agreement?

If you do a basic search on the Internet, you'll find a number of rumors, all with one consistent theme. That being that PrepaYd failed to pay its fees to Sprint, and Sprint subsequently terminated the relationship. PrepaYd stated that they were filing an Anti-Trust Claim against Sprint for anti-competitive and unfair business practices. What really happened? We may never know. However, it is likely is that for whatever reasons PrepaYd stopped paying Sprint, or otherwise violated the terms of their contract, and that Sprint gave them some kind of notice (likely at least 30 days), and PrepaYd failed to inform its partners and customers.

You'll find a myriad of Sprint-bashing comments, however, it's highly unlikely that Sprint wouldn't provide notice. With first-hand knowledge of Sprint's lawyers' philosophy, terminating even the most basic service requires notice, let alone eliminating someone's service altogether. That simply leaves them open to class action suits, and despite anyone's frustrations with Sprint, they are quite conservative when straddling Legal gray areas. In other words, although I don't have any insight into what happened between PrepaYd and Sprint, I feel quite confident that the onus lies with PrepaYd.

I actually interviewed Josh Berman, the Founder and Vice President back in December 2011, the month of their launch. You can tell from the first few questions that I have some concerns about MVNOs in general. Wireless is such a competitive market, and differentiating oneself has become extremely difficult. Do customers really care about the brand? I say, no; we want good phone selection, good value, and good coverage.

MVNOs in particular must have a unique value proposition to become, and remain, appealing. The truth is that there are very few innovations that really make one carrier stand out over another. And these small MVNOs try to be niche players, or appealing to regional markets, however, in my opinion, this business is simply too expensive and complex to survive as an MVNO, let along thrive. Even Virgin Mobile, one of the most recognized brands on the planet wasn't profitable when they were a Sprint MVNO. Now that Sprint owns Virgin Mobile, I suspect their financials are much stronger.

Rumor has it that PrepaYd's then CEO, Bruce Berman, has a poor reputation where customers and investors lost money on his various products he's sold over the years. That said, I don't know Bruce and can't comment on these rumors. Regardless, did PrepaYd have proper notice and use the time to attempt to resolve their dispute with Sprint, and when that time ran out customers severely lost out? We will probably never know.

All-in-all, let this be a lesson to us all. Small wireless companies (or small resellers in any industry for that matter) can offer tremendous value and exceptional customers service, however, they also represent a large risk that they're not financially soluble. In other words, they can have the best of intentions, and simply be unable to manage to a profitable and sustainable business model.

That said, there are a LOT of MVNOs out there that have been around for many many years, and who continue to provide excellent service. So I'm not saying to stay away from MVNOs, however, I would keep in mind whether your phone is unlocked and can be used with another carrier in case something does happen. That way you don't have to be stuck unexpectedly having to purchase a new phone. In addition, if you're using a smartphone, consider porting your number to Google Voice. Using Google Voice allows you to rest assured that if your wireless account were to disappear one day, you will still have your previous phone number. There are some trade offs of that service, so read up on Google Voice if you're interested in learning more.

Final Thoughts - It's the Wild Wild West out there in the world of wireless, and MVNOs are like independent cowboys running around wild. There are some great ones that are worth your precious dollars, however, choose wisely and take precautions to ensure that you don't take a bullet in the back when you least expect it!

Follow @prepaidguy