Prepaid mobile broadband gaining traction
AT&T (NYSE:T) this week became the latest operator to explore prepaid mobile broadband, further validating the trend toward pay-as-you-go wireless services. Previously prepaid operators like Leap Wireless (NASDAQ:LEAP) and Virgin Mobile were the only ones interested in being prepaid data operators, while the big operators stuck with their big monthly contracts. The landscape, though, is shifting as both AT&T and Verizon Wireless (NYSE:VZ, NYSE:VOD) have taken up prepaid data plans.
Likely neither operator expects that prepaid will supplant postpaid, but given the high cost of monthly data plan, the length of the contracts required, and the onerous data caps applied for going over one’s data budget, they’re likely getting wise to the fact that a contract plan isn’t for everyone. The prices they’re charging–$50 for 500 MB of usage–also ensures that a postpaid plan will always be more attractive if you can afford the cost and contract commitment. But with daily and weekly options, prepaid would be far more attractive to intermittent users.
The question is whether the big operators’ more restrictive plans can hold up to far more competitive pricing in the market. Virgin, now owned by Sprint (NYSE:S), is charging $60 for 1 GB of capacity. Leap Wireless charges $40 for unlimited access to its EV-DO network, while Clearwire (NYSE:CLWR) is charging $45 a month for unlimited access to its WiMax networks and $30 a month for 2 GB. The advantage AT&T and Verizon have over Clearwire and Leap, though, is nationwide network availability, which is nothing to scoff at.
