Prepaid Cell Phones: The New Growth Industry

Cell phone plans are the best for people who talk frequently – businessmen, lawyers, or for people who are away from their relatives and speak every day with them. In general mobile plans are more expansive than prepaid cell phone cards. Also, it requires signing long-term agreement with the mobile company. However, cell plans suggest you a large number of free minutes with your favorable people and the cost per minute is cheaper than prepaid cell plans.

To choose the best cell plan, you should make a cell plans comparison. There are a variety of mobile operators. They suggest different cell plans. To choose the best cell plan for you, first you should check the plans that the most popular mobile operator suggest. See all of them carefully. You can do that when you are online. Or you can go to the closest office and to consult unlimited data mobile plans

You will make your choice easier, if you answer to several questions. How often do you use your phone? Who are you talking more often with? How many messages do you send per month? How many minutes are you able to use per month? How much money are you able to spend for you cell phone bill per month?

The landscape of the mobile cellular phone market has shifted in recent years. While the overall mobile phone market continues to grow, traditional post paid plans are shrinking in total market share. Contract plans are quickly being replaced by cheaper prepaid cell phones.

Prepaid vs. Post Paid
The two general types of mobile phone plans are prepaid and post paid. With prepaid, you pay for your minutes upfront. With post paid, you pay for minutes at the end of each month. Post paid plans require a credit check and a contract because you pay for your minutes after you’ve used them.

Growth Statistics
The cell phone market has grown every year since its inception, and the overall market continues to grow. In the United States, over 80% of the population now uses cell phones. That trend continues to grow, although much slower now than in previous years.

Traditional contract phone plans have been the primary niche within the cell phone market and that niche grew year after year. However, in 2008 the growth trend started to slow. From 2008 to 2009 the net additions of post-paid customers across all major carriers fell 58 percent. In 2009 the post paid subscriber growth actually reversed and the market share is currently shrinking.

Meanwhile, prepaid customers are increasing. In 2008 about 50 percent of new cell phone users signed up for prepaid cell phone service. The next year, in 2009, about 80 percent of phone subscriber growth came from prepaid plans.

Historically, prepaid phone plans have been used by two types of people: young people and people with bad credit. Because traditional post paid plans require a credit check, many people have been unable to purchase a traditional post paid cell phone. Traditionally, those people with no credit or bad credit have made up the bulk of the prepaid market. The one disadvantage of prepaid plans, up until recently, was that prepaid cell phone plans have been more expensive than post paid plans.

Prepaid Is Now Cheaper
However, a few years ago the price of prepaid plans started to come down. Now prepaid cellular phone plans are significantly less expensive than post paid plans. Many prepaid carriers are now even offering unlimited minutes plans that are less expensive than comparable contract plans that have 500 minutes. The current low cost of prepaid plans and the downturn in the economy are fueling the explosive growth of the prepaid cell phone market.

Of course, the major cellular phone companies are not happy about this, since they make much more money on contract plans than they do on prepaid. There are three reasons for this is. The first is that post paid plans are more expensive than prepaid plans. Traditional contract plans can run upwards of $80 a month while a prepaid plan with the same minutes could be as cheap as $40. Second, not only do mobile phone companies make more money on contract plans, but they have a secure recurring income stream by locking their customers in with long term contracts. The third reason post paid plans are so lucrative for the cell phone companies is that they charge exorbitant rates if you go over your minutes allowance, sometime 25 or 50 cents per minute. This adds up very quickly and many people have accidentally run up huge cell phone bills of several hundred dollars.

Of course, with prepaid plans, you don’t have this issue. Prepaid plans are now cheaper per minute and they don’t have contracts. Also, if you go over the minutes that you’ve purchased, you can simply buy more minutes.

The Future of Cell Phone Plans
Contract cell phone plans continue to be popular with consumers, though. The primary reason is that the handsets that they offer are cheaper, at least up front. Many consumers continue to pick contract plans because they can’t afford a $600 phone. The carriers will subsidize the price of the phone when customers sign a two year contract. In contrast, prepaid handsets are more expensive since none of the price is subsidized. Consumers have to pay full price for prepaid handsets. What consumers don’t realize is that the carriers are able to subsidize the cost of the handset because they know that over the course of that two year contract they’ll make up the cost of the phone (and much more.)

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