More consumers moving toward no-contract cell phones

With the growth in smartphones and wireless data services, will the prepaid wireless market in the U.S. keep expanding?

With the major milestone reached of one out of four U.S. cell phone subscribers already switching to prepaid/no-contract services, two experts — telecommunications analyst Mark Lowenstein, managing director, Mobile Ecosystem, and Sam Simon, senior fellow, New Millennium Research Council — are forecasting continued growth in prepaid wireless, as consumers search for lower cost, more flexible options to connect their multiple mobile devices.
Lowenstein and Simon see three major factors as making it very likely that prepaid subscribers could reach the level of one out of three in the U.S. in the next 12 months.

“What we are seeing today is an almost perfect storm of factors that are making prepaid wireless increasingly attractive for middle-class consumers,” says Simon. “When you combine the ongoing expense and rigidity of contract-based wireless service with the sluggish economy, the rise of unlimited prepaid calling, texting and Web access, and the availability of more and more low-cost prepaid smartphone handsets, it becomes increasingly difficult for any savvy consumer to justify sticking with contract-based cell phone service.”

Lowenstein adds: “Prepaid wireless continues its march into the mainstream consumer market. The first wave of growth for prepaid centered on the availability of lower cost plans for voice, text, and data. Now, the availability of high-quality smartphones for under $100 is driving data push into the mainstream market, where middle-income Americans are looking for more affordable data services for their connected devices.”

Simon and Lowenstein pointed to three factors likely to push prepaid subscriber levels to the 33 percent milestone level:

° The continuing rise of prepaid wireless with unlimited calling, texting and Web access. 

° The middle-class “mainstreaming” of prepaid wireless via the introduction of smartphones.

° The emergence of what is likely to be the next big thing — “SIM only” prepaid, also referred to as “bring your own phone” or “bring your own device.”