Everyone in the industry knows that prepaid subscriptions have grown in popularity thanks to miserable economic conditions. But even those in the know might be surprised by prepaid influence in the first quarter of this year: Of the 3.5 million retail net subscribers added by the top 10 U.S. carriers in the first quarter, 75 percent were prepaid users. That’s right – three quarters, or 2.63 million, were prepaid.
"The prepaid carriers in the U.S. are rolling out very competitive price options for consumers,” said Richard Murphy, IDC’s Wireless and Mobile Communication analyst, in a report. “Wireless users are looking closely at their plan options during this very tough economic cycle. If wireless users continue to look to save money on monthly bills, prepaid offerings could become a very serious option.”
Prepaid subscribers currently comprise 19.2 percent of the top 10 carriers’ customer base, and IDC expects their numbers to remain strong through the second quarter. Data revenues also remained strong, comprising 25 percent of total retail service revenue.
In terms of prepaid net additions, MetroPCS finished with 687,000 net adds, TracFone ended with 567, 000 and Leap Wireless managed to add 492,000 net additions. Boost Mobile, Sprint’s prepaid division, gained a net 764,000 customers on the iDEN network.
On the postpaid side, Verizon Wireless closed the quarter at 1 million net additions, while AT&T finished with 875,000.
The U.S. wireless market is becoming increasingly saturated. There are currently 274 total wireless subscribers in the United States. IDC expects second-quarter gross additions to remain close to 20 million users, with reports that total wireless retail subscribers will hit 286 million by this time next year.
“With the wireless subscriber market reaching a point of saturation in the United States, carriers are becoming more aware of movement among customers,” Murphy said. “Wireless carriers must not just focus on bringing new customers in the door; they must also pay attention to current customers. Those carriers that are able to avoid customer churn will stay competitive.”