Prepaid phones gain ground as users seek to lower bills

Published 5:00 am Monday, September 13, 2010

MIAMI — Sales have never been better for MetroPCS. The prepaid cell phone retailer broke records in the first and second quarter of 2010 with new subscribers to its no-contract, monthly flat-rate mobile service.

Once aimed at customers with poor credit or those who rarely used a cell phone, prepaid phones increasingly are drawing customers angered by mobile bills of $100 per month, said Steve Roberts, regional vice president of sales and distribution of Metro- PCS’s Miami office. Some parents are even buying prepaid phones to teach their teens to limit costs.

What’s keeping those customers with MetroPCS and similar services are phones common in the marketplace but new to prepaid customers: feature-rich smart phones.

To keep up with smart phone demand, MetroPCS added a second BlackBerry phone to offerings this summer. A phone that runs on Google’s Android operating system is “on our road map,” Roberts said. The company will be adding 4G wireless speeds to Florida by the end of the year.

Competitor Boost Mobile just launched its first touch-screen smart phone and first Android smart phone — the No. 1 selling smart phone operating system in the U.S.

All major cell phone carriers also offer prepaid plans and phones. Service giant Sprint has seen 60 percent of its new customers this year choose a no-contract option, such as Boost or Virgin Mobile — both of which it sells.

“The economy was a catalyst for people to look at no-contract options, and people adopted it and are happy,” said Neil Lindsay, chief marketing officer for Sprint Prepaid.

Even among major service providers, prepaid options have become more popular. T-Mobile has seen its prepaid customers double since 2006, and spokesman Graham Crow said more customers are using prepaid as a way to test-drive a bill.

Marketplace