The cell phone industry has shifted in the past several years. Even though the overall cell phone market remains a growth industry, traditional post-paid plans are now diminishing in total current market share. Postpaid programs are rapidly being replaced by less costly prepaid cellular phones.
The two basic varieties of phone service plans are prepay and contract plans. With prepay, you pay for your airtime ahead of time. With contract plans, you pay for your minutes after you've used them. Contract programs require a credit verification because you are essentially using your minutes on credit.
The cellular phone market continues to grow each and every year since its beginning. In the America, about 80% of the inhabitants utilize cell phones. That growth pattern continues to increase, however a lot more slowly today than in preceding years.
Traditional contract cell phone programs have been the prime segment within the mobile phone market and that sector has increased every year. However, in 2008 the growth trend of contract plans began to slow. From 2008 to 2009 the total additions of new contract plans fell 58%. In 2009 contract subscriber growth in fact reversed and the industry share is now getting smaller.
Meanwhile, prepay subscriptions are increasing. In 2008 in excess of 50% of new cellular phone users signed up for prepay phone service. The next year, in 2009, in excess of 80% of mobile cellular buyer growth came from prepay service plans.
In the past, prepaid service plans were used by two kinds of consumers: teens and people with bad credit. Since classic postpaid programs call for a credit check, some people were incapable of purchasing a standard postpaid plan. In the past, those people with bad credit or even no credit history composed the majority of the prepaid user base. The one negative aspect of prepaid plans, up until just recently, was that prepaid cell phone plans were much more expensive in comparison with postpaid programs.
However, a few years ago the cost of prepaid plans began to fall. Now prepaid mobile phone service plans are significantly less costly than postpaid plans. Numerous prepaid companies are providing unlimited airtime plans that are less expensive than similar postpaid service plans that have 500 minutes of airtime. The cheaper cost of prepaid plans, along with the economic recession, is fueling the intense growth of the prepaid phone sector.
Obviously, the key cell phone companies aren't happy about this because they generate a great deal more profit on post-paid plans when compared with prepaid. There are three reasons for this is. The first is that contract plans are a great deal more expensive than prepaid plans. Standard post-paid contract plans can run in excess of $80 monthly despite the fact that a pre-paid plan with the same airtime might be as affordable as $40 a month. Next, not only do mobile service providers make a lot more money on contract plans, they also currently have a risk-free regular revenue stream by locking their clients in with long-term service contracts. The last reason contract programs are so profitable for the mobile carriers is that they charge exorbitant charges if you exceed your minutes allowance, quite often 50 cents for each minute. This accumulates rapidly and numerous people have unexpectedly run up significant mobile cellular fees of a few hundred dollars.
Obviously, with prepay service plans, you don't have these problems. Prepay programs are now less expensive per minute and they don't require service contracts. In addition, should you exceed the airtime that you have paid for, it is easy to just purchase more airtime.
Postpaid programs continue to be preferred by consumers, though. The major justification is that the phone handsets that come with contract plans are more affordable, at least in the beginning. Many consumers continue to choose postpaid plans due to the fact they can not afford a $400 mobile phone. The phone carriers subsidize the cost of the handset when buyers sign a 2 year contract. In comparison, prepaid models are usually more expensive given that none of the price is subsidized. Customers have to pay for the entire price of prepaid handsets. What purchasers do not realize is that the contract plans are able to pay for the price of the phone since they fully understand that over the course of a two year contract they'll make up the price of the handset.
Prepay plans continue to gain market place share. They simply make more sense financially for consumers. The country's economy has been depressed for many years and there is no indication that it's getting better. The lower total cost of prepay cell phone plans will continue to fuel their growth and more consumers will choose prepay plans over the classic contract plans.
The two basic varieties of phone service plans are prepay and contract plans. With prepay, you pay for your airtime ahead of time. With contract plans, you pay for your minutes after you've used them. Contract programs require a credit verification because you are essentially using your minutes on credit.
The cellular phone market continues to grow each and every year since its beginning. In the America, about 80% of the inhabitants utilize cell phones. That growth pattern continues to increase, however a lot more slowly today than in preceding years.
Traditional contract cell phone programs have been the prime segment within the mobile phone market and that sector has increased every year. However, in 2008 the growth trend of contract plans began to slow. From 2008 to 2009 the total additions of new contract plans fell 58%. In 2009 contract subscriber growth in fact reversed and the industry share is now getting smaller.
Meanwhile, prepay subscriptions are increasing. In 2008 in excess of 50% of new cellular phone users signed up for prepay phone service. The next year, in 2009, in excess of 80% of mobile cellular buyer growth came from prepay service plans.
In the past, prepaid service plans were used by two kinds of consumers: teens and people with bad credit. Since classic postpaid programs call for a credit check, some people were incapable of purchasing a standard postpaid plan. In the past, those people with bad credit or even no credit history composed the majority of the prepaid user base. The one negative aspect of prepaid plans, up until just recently, was that prepaid cell phone plans were much more expensive in comparison with postpaid programs.
However, a few years ago the cost of prepaid plans began to fall. Now prepaid mobile phone service plans are significantly less costly than postpaid plans. Numerous prepaid companies are providing unlimited airtime plans that are less expensive than similar postpaid service plans that have 500 minutes of airtime. The cheaper cost of prepaid plans, along with the economic recession, is fueling the intense growth of the prepaid phone sector.
Obviously, the key cell phone companies aren't happy about this because they generate a great deal more profit on post-paid plans when compared with prepaid. There are three reasons for this is. The first is that contract plans are a great deal more expensive than prepaid plans. Standard post-paid contract plans can run in excess of $80 monthly despite the fact that a pre-paid plan with the same airtime might be as affordable as $40 a month. Next, not only do mobile service providers make a lot more money on contract plans, they also currently have a risk-free regular revenue stream by locking their clients in with long-term service contracts. The last reason contract programs are so profitable for the mobile carriers is that they charge exorbitant charges if you exceed your minutes allowance, quite often 50 cents for each minute. This accumulates rapidly and numerous people have unexpectedly run up significant mobile cellular fees of a few hundred dollars.
Obviously, with prepay service plans, you don't have these problems. Prepay programs are now less expensive per minute and they don't require service contracts. In addition, should you exceed the airtime that you have paid for, it is easy to just purchase more airtime.
Postpaid programs continue to be preferred by consumers, though. The major justification is that the phone handsets that come with contract plans are more affordable, at least in the beginning. Many consumers continue to choose postpaid plans due to the fact they can not afford a $400 mobile phone. The phone carriers subsidize the cost of the handset when buyers sign a 2 year contract. In comparison, prepaid models are usually more expensive given that none of the price is subsidized. Customers have to pay for the entire price of prepaid handsets. What purchasers do not realize is that the contract plans are able to pay for the price of the phone since they fully understand that over the course of a two year contract they'll make up the price of the handset.
Prepay plans continue to gain market place share. They simply make more sense financially for consumers. The country's economy has been depressed for many years and there is no indication that it's getting better. The lower total cost of prepay cell phone plans will continue to fuel their growth and more consumers will choose prepay plans over the classic contract plans.
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To find out more about prepaid cell phones, then visit Sarah Mitchel's site on how to choose the cheapest prepaid plan for your needs.
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