Part of the problem is Image as many have already mentioned, and a large part is also the limited options.

In the rest of the world, Pre paid is a much more viable option because carriers understand that different people have different usage needs and offer flexiable affordable plans as well as cool handsets.

Here in the UK (Whee I am now), most carriers have 3 to 4 if not more Prepaid plans, which you can choose based on whether you call more in network, out network, text,etc and most if not all also offer competitive pricing on things like 3G data (avg £15 = $25 for 3GB per month) as well as cheaper international calling rates etc.

So while contracts offer the most expensive phones free or heavily subsidised, you can also get them on prepaid, though you might have to pay a higher price, but you at least have the option. As such if your usage is not high enough for you to justify paying such high monthly costs, you can still get the phone you want, while keeping cotrol of your monthly spending.

And the easy availability of Unlocked phones, and Number portability on prepaid phones means that carriers have to be competitive if they want to hold on to their customers.

It seems with prepaid growing, some new prepaid users believe they are sacrificing cool phones and reliable service. Not so with Boost. Boost is wholly owned by Sprint Nextel and therefore runs on its dependable nationwide iDEN network – and we’re talking real nationwide that reaches over 15,000 cities – not a few hundred cities that other prepaid companies have been claiming equals nationwide. And in 1Q of 2009, Boost will be rolling out an Unlimited plan, so everyone get excited! Boost phones are hip, durable, and come with great features like GPS, camera, ringtones, Web, and more. While Boost is not the cheapest prepaid option out there, it is definitely the best value for your buck. For more info, check out http://www.boostmobile.com.

Like everyone else here said, the U.S. also has been conditioned to get subsidized phones. I know it’s the opposite around the world, but we’re America darnit, and we don’t like to change. Not to mention we have at least 120 million subs on CDMA technology, ridiculously separate 3G bands, and controlling carrier – making the unlocked SIM-swapping culture much more difficult to maintain.

Still, pre-paid does have its place, and AT&T will tell you that they sold far more Go Phones last year than iPhones. It’s just the sexy gadgets get most of the press attention.

I’ve compiled the major per minute, per day, per month, and monthly unlimited plans on my site to help consumers zone in on the best option to meet their needs.

Cheers, PrepaidWirelessGuy http://www.prepaid-wireless-guide.com/compare-prepaid-plans.html

You make a good point — but who is going to define people with good credit and bad credit. After all the geniuses who were supposed to measure our credit and keep us safe — the banks – doled out debt like heroin. and now they are themselves “bad credit worthy” and as a result it is hard to believe that.

On your specific comment, yes I do agree — people are facing a different kind of reality today.

“…increased attractiveness of PRE-paid…”

For the most part, pre-paid is not as economical as post-paid. The number of people with bad credit is increasing and those with good credit are not as willing to sign a contract, betting that they will keep their jobs for the duration.

In other words, this trend is not so much of an indication of the increased attractiveness of post-paid as it is a sign that more people are in trouble and others are lacking confidence in their own economic futures.

http://www.muniwireless.com/2008/12/04/why-more-americans-dont-have-prepaid-plans/

I posed the question on Linked In and got interesting answers, which are also in the above-mentioned article. The researchers believe that the No. 1 reason Americans don’t go more for prepaid is that they don’t know they can get out of the termination penalty. Some believe it’s permanent, others don’t know the date on which it expires.