The prepaid wireless market in the United States has experienced well-defined stages of growth, plateau, and renewed growth cycles. Recently experiencing a growth plateau, prepaid wireless remains the service of choice for millions cellular customers in the United States. No longer carrying the sigma it once had as a service mostly for the credit-challenged, a large number of customers choose prepaid over post-paid.
The reasons are many and varied including lower costs for many of the same features and benefits as post-paid plans such as smartphones and advanced feature/functionality. It also anticipated that prepay wireless will once again achieve a substantive growth phase due to a few important factors evaluated in this report such as increasing need for anonymity for certain emerging services.
Prepaid wireless service providers in the United States have become increasingly competitive in recent years as they evolve offerings to be more on par with post-paid service features and plans. For example, Verizon Wireless now offers prepaid family plans, unlimited plans, and support for BYOD whereas this was not the case just a few years ago. Mind Commerce anticipates continued evolution of prepaid wireless in general as part of a dominate trend towards prepay mobile services becoming increasingly more comparable with post-paid wireless.
Prepaid Wireless Market Dynamics
Mind Commerce anticipates significant upheaval in the prepaid wireless market as a result of the Sprint and T-Mobile merger. We have already witnessed some minor changes, such as the rebranding of Metro PCS to Metro by T-Mobile. There is strong reason to believe that the combined company will make more significant changes post-merger including rationalization of pricing, feature functionality, and ultimately brand consolidation. There is also the likelihood of substantively higher prices in the long-term.
In the intermediate term, there will be a considerable impact on the non-subsidiary prepaid brands that rely upon a Mobile Virtual Network Operator (MVNO) model for services delivery. The combined MVNOs supported by the two companies will find themselves in a weaker negotiating position regarding deal terms. T-Mobile subsidiaries will likely evolve to a purely T-Mobile. Along the way, these subsidiaries are expected to receive better feature functionality, support, and differentiation as a Mobile Network Operator (MNO) owned brand. The overall effect will be to move the combined company towards a consolidated prepaid wireless business unit with enhanced profitability and more competitive against prepaid wireless offerings from AT&T and Verizon.
The future of prepaid wireless communications will depend on more than just carrier-centric applications, communications, content, and commerce. For example, prepaid will be an important aspect of many next generation services that are provided by a variety of third-party service companies that do not wish to offer a prepaid option, thus relying upon wireless carrier billing via prepay. The prepaid wireless market will be thrive as new applications, digital content, and commerce offerings rely upon prepayment.
The future of prepaid wireless is very bright as it becomes more fully integrated with mobile commerce by way of stored value and converged services involving next generation technologies such as WebRTC. Other prepaid wireless market growth areas include prepaid 5G (data services, apps, and Vo5G) and prepaid Internet of Things (IoT) for the DIY IoT marketplace.
While many emerging applications will be offered by Over-the-Top (OTT) service providers, Mind Commerce strongly recommends that MNOs offer their own branded/controlled Value-added Service (VAS) applications. The OTT application business model has caused data payload (e.g. apps that use data) to become increasingly more valuable to consumers than data itself, which is rapidly becoming a marginalized commodity. With this development, VAS applications become much more important to the network operators.
With the ever-increasing commoditization of carrier core services (mostly voice and messaging), there will be a growing dependence on VAS applications for initially top line revenue growth (as data growth tapers off and margins are squeezed) and then for margin growth as bearer services become a cost-plus commodity. Prepaid wireless service providers must also provide their own VAS apps to remain competitive, even if it necessitates them offering those apps on an OTT basis themselves.
Prepaid Wireless Market Report
This report evaluates the prepaid wireless market in the United States including major provider analysis and service assessment, technologies involved in prepaid service delivery, and assessment of the future of prepaid communications, content, and commerce. The report also provides forecasts for 2019 through 2024. The report also analyzes major MVNO companies and offerings. The report also provides a view into the future of prepaid wireless and market forecasts through 2024 including subscribers and Revenue by Voice vs. Data vs. VAS and by Connectivity Type.
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