*For wireless subscribers, commitment is out and short-term relationships are in.
This year, customers have been making a big shift away from two-year contracts toward “prepaid” cell phone service, which often costs less and does not require contracts. This is happening even though contracts are needed to get popular phones such as the iPhone and the Droid.
Now prepaid service looks like it will get even more attractive, with further price cuts. That’s because wireless carriers have hit a wall when it comes to finding new customers who will sign contracts.
“I would love to have an iPhone. I just can’t swallow the $70 or more bill that would come with it,” said Jeff Finlay, a 45-year-old stay-at-home dad in San Antonio who uses a prepaid plan.
Unlike contract plans that bill subscribers each month for the services they used the previous month, prepaid services traditionally let subscribers buy minutes in advance for around 10 cents to 20 cents each. When the minutes are used up, people “refill” their accounts as needed.
For years, such plans were marketed primarily to people who did not have the credit to qualify for plans with contracts. About one-fifth of Americans with cell phones are on prepaid, according to the New Millennium Research Council, a Washington-based think tank.
But as the recession forced more people to cut costs, prepaid service appealed to a broader slice of the market, and prepaid services responded by offering better deals.
Now it’s possible to make unlimited calls and text messages on a prepaid plan for $45 a month – half of what it costs a customer with a contract on Verizon Wireless. At Tracfone, the largest independent provider of prepaid service, customers pay an average of $11 per month.
Read the rest of this AP story HERE.