The Prepaid Press - March 2009 - (Page 8)

PREPAID TELECOM March 15 · 2009 - 8 Unlimited Wireless Calling Changing Cellular’s Destiny from page 1 to compete? Let’s take a look back at the start of unlimited. The Year of Unlimited In early 2008, the traditional Tier I carriers started unlimited airtime rate plans. Last February, Verizon Wireless became the first carrier with a $99.99 national unlimited calling plan. Industry watchers were shocked, according to William Ho, Research Director, RCRWireless. The era of unlimited was ushered in when AT&T and T-Mobile USA quickly followed, setting comparable price points and add-ons. A few weeks into the game, Sprint came out with its “Simply Everything” plan, throwing in messaging, data and navigation on top of unlimited calling, notes Ho. Then in June 2008, Virgin Mobile launched “Totally Unlimited” for $80/month, challenging national carriers. Now in 2009, the competition renews itself. As a trial and limited to customers in San Francisco, T-Mobile USA, the fourth-largest cell phone operator in the US responds to the Boost $50 plan by launching a special $50 unlimited voice plan. If it works, it will go nationwide. According to Marguerite Reardon, CNET reporter, T-Mobile and Sprint continue to compete for value customers. Reardon reports that the promotions come as T-Mobile faces stiff competition from the three other major cell phone operators in the US. Recently, Verizon Wireless announced the new Prepaid Unlimited Talk plan, described as ideal for heavy wireless users who want to enjoy many of the same service options enjoyed by customers who sign annual contracts. This plan gives customers unlimited calling to anyone on any network across the US for only $3.99 daily access, charged only on the days that calls are made and received. The new Prepaid Basic plan is designed for the infrequent wireless user. Customers simply pay $0.25 per minute of talk and $0.20 per text message sent and received. The GoPhone plan from AT&T has Unlimited Talk to customers within the AT&T network starting at $39.99. For calls outside the network, the price goes up. It’s one of the Pick Your Plan options, with no annual contract or credit check. Effects of Flat Rate Plans “For prepaid carriers like Boost that are offering unlimited plans, there may be two effects,” says Pelorus Group analyst Alan Fross. One, it could raise their Average Revenue per User (ARPU) by incenting some existing subscribers to upgrade to the all in one plan. Many users might want the ability to access the web via their mobile and be willing to increase their monthly prepaid amount. It could also generate additional revenue by existing subscribers upgrading their phones for better web access. Secondly, it could pull some postpaid subscribers to prepaid, especially in the existing economic climate. “This new flat rate pricing could be attractive to single users (non-family plan types) who want data access, but are flinching at the higher postpaid pricing for data access,” says Fross. Smith says that unlimited is good for the industry, but a threat to all of the operators, except for the Blackberry and iPhone market. “It’s a really competitive offer that will force bigger carriers to compete,” Smith notes. But Fross thinks that flat rate plans at lower price points might not be in the best interests of postpaid carriers. “Lower price points might attract their own existing mobile data users and cannibalize their revenues. They might lose more from decreasing their own ARPU than save by trying to keep some defectors from prepaid,” says Fross. C M Y CM MY CY CMY K have to worry about service loss and tracking minutes, according to Osvaldo Rodriguez, President and CEO of iPayStation LLC. “The service becomes more postpaid-like and removes the anxiety associated with pending service outages due to not adding airtime,” he notes. As for distributors and retailers, Rodriguez says they love the new unlimited plans, as the customer is now doing a single transaction that is in excess of $50 or more on a monthly basis. Still, unlimited can be a double-edged sword because one monthly visit, rather than weekly top-ups with a $10 or $20 card reduces the frequency of customers visiting the store, providing less foot traffic, and decreases in cross-sell and up-sale opportunities. “I guess the real question is: Do you want a customer to visit once monthly for a sizable transaction, especially by C-Store standards, or do you want a customer that returns daily or weekly to add minutes to his mobile?” asks Rodriguez. 1 Wireless Dealer Ad Revised Red.pPage The bottom line for low-cost unlimited plans is that they will surely increase competition and raise the bar on quality and operational efficiency. As for prepaid penetration, PrepaidWirelessGuy foresees a tremendous spike coming over the next 18 to 24 months, noting, “The state of the economy is forcing people to take a second look at the value of their postpaid plans, and the absurdity of signing long term contracts.” Denny Scher, Marketing Coordinator at Page Plus Cellular, thinks that unlimited wireless is here to stay. “It’s good for high-users,” says Scher. “People who talk and text a lot will get their money’s worth.” 3/5/2009 10:21:20 AM “Unlimited calling, honey.” Operational Efficiency The all-you-can-eat plans that require no contract or credit check are ideal for recession times. From the customer’s perspective, unlimited plans are more valuable and less stressful as you don’t http://www.lunexcenter.com http://www.lunexcenter.com

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The Prepaid Press - March 2009 Contents The Retske Report: A Disconnect in Connecticut Regulatory Rundown 5 Minutes With Brooks Smith, CEO of InComm TracFone Launches SafeLink Wireless in NY iPayStation Enables International Top-Up Comverse Launches Next-Generation IMS Solution Prepaid Companies Agree to Pay $2.25 Million Prepaid Telecom in Brief Boost Mobile Reintroduces Itself Virgin Mobile Announces New Branding Campaign The State of Prepaid Technology: Becoming a Virtual Operator Prepaid Wireless Roundup New Prepaid Calling Plans from Verizon Wireless The Legal Line Jobless Benefit Debit Card Usage Debated InsurCard Provides Catastrophic Relief Solution Metavante, Monitise Americas Launch Text Banking TransCard Provides Personal Financial Management Walmart to Help Americans Manage Finances Payments and Processing in Brief Prepaid Consumer and Employee/Partner Incentives CashStar Launches Interactive Gift Card Platform VIPGift Continues Sales Expansion Pentagon Installs Unique Card Personalization Line Digital Promotions Grow in Popularity The Ultimate Gift Card Network Retail Sales Show Unexpected Rebound Smart Transaction Systems Selects Hypercom GiftCards.com Acquires Swapagift.com InComm Gaming Opportunities on the Rise VCT Adds Equipment to New Jersey Facility Gift Cards and Promotions in Brief Our Advertisers Contact Us

The Prepaid Press - March 2009

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