The makeup of the cell phone market has changed in recent times. The overall cell phone market continues to increase, but standard post paid programs are decreasing in entire overall market share. Contract plans are quickly becoming replaced by lower priced prepay mobile phones.
The 2 general kinds of cell phone programs are prepaid and post-paid. With prepaid, you purchase your minutes upfront. With post-paid, you pay for your minutes after you've used them, and because of that they require a credit check and a service contract.
The cell phone marketplace has grown each year since its beginnings, and the overall sector continues to grow. In The United States, over 80% of the public at this point use cell phones. That trend is growing, though substantially less quickly today than in prior years.
Standard post-paid phone service plans are the main component within the cell phone market and that segment grows yearly. Having said that, in 2008 new subscriber growth began to slow. From 2008 to 2009 the net additions of new subscribers through all major carriers fell 58%. The following year post-paid growth literally reversed and its share of the total market is shrinking.
In the mean time, new prepaid subscriptions are expanding. In 2008 in excess of 50 percent of brand new cell phone users decided upon prepaid mobile phone service. The following year, in 2009, in excess of 80 percent of new cell phone subscription growth came from prepaid service plans.
Historically, prepaid mobile plans had been used by only two variations of individuals: kids and people with negative credit. Due to the fact traditional post-paid programs call for a credit verification, many people were unable to purchase a conventional post-paid cell phone. In times past, those people with negative credit or no credit have composed the bulk of the prepaid market. The only disadvantage of prepaid programs, up until very recently, was that prepaid cell phone service plans had been much more costly as compared with post-paid programs.
Two years ago the price tag of prepaid plans started to drop. Currently prepaid cell phone service plans are substantially less costly than post-paid service plans. Quite a few prepaid providers are even providing unlimited airtime plans that are less expensive than equivalent post-paid service plans that have 500 minutes of airtime. The present affordability of prepaid programs and the economic recession are fueling the intense progress of the prepaid cellular phone market.
As expected, the major phone companies are not exactly pleased with this, considering that they earn much even more revenue on postpaid programs as compared to prepaid. There are several factors for this is. The first is that contract plans are more expensive than prepaid programs. Conventional postpaid programs can run upwards of $80 per month even though a prepaid plan with a similar amount of minutes might be as low priced as $40. Second, not only do cellular providers generate much more income on postpaid programs, but they have a secure, repeated revenue stream by locking their users into 2 year contracts. The last reason postpaid programs are so profitable for the phone companies is that they charge exorbitant prices if you go over your minutes, often 25 to 50 cents for each minute. This can add up quickly and many consumers have unexpectedly run up enormous bills of many hundreds of dollars.
Needless to say, with prepaid plans, you don't have this issue. Pay as you go plans are now more affordable for each minute and they do not require contracts. Additionally, in the event you go over the minutes that you've purchased, you're able to just pay for additional airtime.
Contract cell phone programs remain popular with buyers. The most important factor is that the handsets that they offer are cheaper, at least upfront. Many people continue to choose post-paid service plans because they can not afford a $500 mobile phone. The mobile phone company will finance the price tag of the cell phone when consumers sign a 2 year contract. When compared, prepaid models are definitely more expensive since none of the price is subsidized. Clients have to shell out top dollar for pay as you go models. What customers do not recognize is that post-paid service plans are able to pay for the price tag of the mobile phone since they recognize that over the course of 2 years they'll make up the cost 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 2 general kinds of cell phone programs are prepaid and post-paid. With prepaid, you purchase your minutes upfront. With post-paid, you pay for your minutes after you've used them, and because of that they require a credit check and a service contract.
The cell phone marketplace has grown each year since its beginnings, and the overall sector continues to grow. In The United States, over 80% of the public at this point use cell phones. That trend is growing, though substantially less quickly today than in prior years.
Standard post-paid phone service plans are the main component within the cell phone market and that segment grows yearly. Having said that, in 2008 new subscriber growth began to slow. From 2008 to 2009 the net additions of new subscribers through all major carriers fell 58%. The following year post-paid growth literally reversed and its share of the total market is shrinking.
In the mean time, new prepaid subscriptions are expanding. In 2008 in excess of 50 percent of brand new cell phone users decided upon prepaid mobile phone service. The following year, in 2009, in excess of 80 percent of new cell phone subscription growth came from prepaid service plans.
Historically, prepaid mobile plans had been used by only two variations of individuals: kids and people with negative credit. Due to the fact traditional post-paid programs call for a credit verification, many people were unable to purchase a conventional post-paid cell phone. In times past, those people with negative credit or no credit have composed the bulk of the prepaid market. The only disadvantage of prepaid programs, up until very recently, was that prepaid cell phone service plans had been much more costly as compared with post-paid programs.
Two years ago the price tag of prepaid plans started to drop. Currently prepaid cell phone service plans are substantially less costly than post-paid service plans. Quite a few prepaid providers are even providing unlimited airtime plans that are less expensive than equivalent post-paid service plans that have 500 minutes of airtime. The present affordability of prepaid programs and the economic recession are fueling the intense progress of the prepaid cellular phone market.
As expected, the major phone companies are not exactly pleased with this, considering that they earn much even more revenue on postpaid programs as compared to prepaid. There are several factors for this is. The first is that contract plans are more expensive than prepaid programs. Conventional postpaid programs can run upwards of $80 per month even though a prepaid plan with a similar amount of minutes might be as low priced as $40. Second, not only do cellular providers generate much more income on postpaid programs, but they have a secure, repeated revenue stream by locking their users into 2 year contracts. The last reason postpaid programs are so profitable for the phone companies is that they charge exorbitant prices if you go over your minutes, often 25 to 50 cents for each minute. This can add up quickly and many consumers have unexpectedly run up enormous bills of many hundreds of dollars.
Needless to say, with prepaid plans, you don't have this issue. Pay as you go plans are now more affordable for each minute and they do not require contracts. Additionally, in the event you go over the minutes that you've purchased, you're able to just pay for additional airtime.
Contract cell phone programs remain popular with buyers. The most important factor is that the handsets that they offer are cheaper, at least upfront. Many people continue to choose post-paid service plans because they can not afford a $500 mobile phone. The mobile phone company will finance the price tag of the cell phone when consumers sign a 2 year contract. When compared, prepaid models are definitely more expensive since none of the price is subsidized. Clients have to shell out top dollar for pay as you go models. What customers do not recognize is that post-paid service plans are able to pay for the price tag of the mobile phone since they recognize that over the course of 2 years they'll make up the cost 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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