Mobile Wallet was developed by Wipit, a mobile payments provider for people without bank accounts and credit cards. Its platform therefore makes an ideal fit for many Boost customers who rely on cash to make pay for their wireless service. The approach seems to emulate the mobile payments revolution going on Africa and South Asia, where mobile operators are become bigger financial services providers than the traditional banks.

Mobile Wallet allows you to pay bills and send money to family or friends in 135 countries through Ria’s cash transfer network. Soon Boost will also offer a digital check cashing service, which lets you scan in a physical check and deposit the funds in your wallet account. You can also transfer money between different accounts, and top off your Boost Mobile plan within the app.

What you can’t do is use the Wallet App to make a payment at store. But Boost and WiPit have gotten around that problem by issuing a Visa prepaid card to any customer that signs up for a premium account. The card draws directly from the Wallet account and is accepted anywhere where Visa is. Google reportedly considered adopting the same approach for its digital wallet but dropped the idea.

Of course, all of these services come with fees, many of which are rather steep. Paying bills costs anywhere from $2 to $5 per transaction, while Ria money transfer fees vary depending on amount and destination. Even loading money into the account costs $3, though once the money is there, you can spend it freely using the Visa card. Until the check cashing service goes live, customers can only load money into the account at authorized Boost dealer locations.

The app is available to Boost’s Android customers and is downloadable in Google Play, but initially Boost is only enabling accounts for customers in Los Angles, San Diego and parts of New Jersey. The company is planning a nationwide rollout by the end of the year.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• The future of mobile: a segment analysis by GigaOM Pro
• Mobile payments: forecasts, technologies and opportunities
• The fourth quarter of 2012 in mobile

Its $60 and $70 prepaid plans still aren’t exactly cheap, but you get a lot more data value out of them. The $60 plan now includes 2 GB of data (up from 500 MB), while the $70 plan includes 4 GB (up from 2 GB). Both includes unlimited talk and text, but as with the previous plans prepaid customers don’t get access to the LTE network. If you want a 4G connection, you’ll have to sign a contract.

I’ve noted before that Verizon is getting a lot more aggressive in the prepaid space – a market it has historically ignored. But Verizon has always been all over the premium smartphone subscriber, and increasingly those customers are moving away from contract plans to prepaid services. In the first quarter, nearly one-third of all smartphones activated landed on a prepaid plan, according to The NPD Group.

While the bigger data buckets are only available to current prepaid customers, Verizon said it will extend them to new customers on June 6.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• How to manage the signaling storm in 2013
• CES 2012: a recap and analysis
• Updated: Forecast: global mobile subscribers, 2010-2015

Since Android has long been the prepaid carrier’s OS of choice, the vast majority of those devices ran Google’s software. NPD’s Mobile Phone Track service show that year-over-year prepaid smartphone unit sales doubled in the first quarter. Quarter over quarter, prepaid’s overall share of the smartphone market jumped from 22 percent to 32 percent. NPD’s VP of industry analysis Stephen Baker said Q1 marked the twelfth straight quarter of triple digit sales increases in the U.S.

Apple certainly isn’t blind to the trend. In fact, it’s been actively seeking out prepaid carrier partnerships in the last year working with carriers like Cricket Communications, Straight Talk and T-Mobile USA. Though the iPhone’s share of the prepaid smartphone market was only 8 percent, that’s up considerably from last year when it was a mere 2 percent. Samsung share of the prepaid smartphone market is big, 32 percent, but it’s relatively stable, while Apple is on a big growth trajectory.

“For consumers looking at prepaid phones today, value does not equate with finding phones that are cheap or obsolete,” Baker said in a statement. “In fact, the Galaxy S2 and the iPhone 4S, two of the top five prepaid smartphone models in 2013, were among the top-selling phones overall just one year earlier.”

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• CES 2012: a recap and analysis
• 2012: Data, spectrum and the race to LTE
• The future of mobile: a segment analysis by GigaOM Pro

I took a quick look at the new AIO Wireless (pronounced “A-O”) website and the plans remind me a bit of T-Mobile’s new Simple Choice offerings. There are just a few choices, and each advertises unlimited talk, text and data, although some of that data is at “high speed” while some is not. AIO will reduce or throttle speeds once you reach the limit for your specific plan.

For $40 a month, 250 MB of data is served at high speed while $55 each month bumps the fast data capacity to 2 GB. A $70 plan boost the fast data cap to 7 GB. You can pay $15 for a tablet to get on the data network but only get 250 MB of high speed service. The press release mentions “4G download speeds of up to 4Mbs”, so the company isn’t offering LTE. Adding an additional gigabyte of fast data service or international calling is available for $10 a month.

Handset choices are as expected for a pre-paid provider, ranging from $30 feature phones to $50 low-end smartphones all the way up to various iPhone models, both at reduced (refurbished) prices to $649.99 for a new iPhone 5. You can also check to see if your own device is supported — I’d be surprised if an AT&T-compatible phone weren’t — but if you have an LTE radio in it, it won’t be used.

It seems that the two largest U.S. carriers, AT&T and Verizon, are following suit when it comes to their expensive investments in LTE network upgrades: Keep the fastest services for those on contract. This helps recoup the investment faster by nudging high speed data users to generally more expensive monthly plans that practically guarantee an income stream for two years.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• CES 2012: a recap and analysis
• Carrier IQ and the continued erosion of operator trust
• 2012: the year of confusion for NFC payments

Why the big boost? América Móvil, the Latin America multinational telecom provider that owns TracFone, didn’t give specifics. But it just so happens that in January TracFone started selling the iPhone 5 at Walmart through its Straight Talk brand.

The offer presents a cheap alternative for consumers craving Apple’s latest and greatest device. You still have to pay the unsubsidized iPhone 5 price of $649, but Walmart spreads it out over 26 monthly payments of $25. Meanwhile Straight Talk’s prepaid service comes in at just $45 a month, including unlimited SMS, voice and data, though Straight Talk will start throttling back speeds if you consume much more than 2 GB each month.

That plan is even cheaper than T-Mobile’s new “Un-carrier” $50 tier while also offering more data. The major drawback is that you  don’t get 4G access.  As a mobile virtual network operator (MVNO), TracFone buys network access from the major carriers. The iPhone deal uses either Sprint or Verizon Wireless’s CDMA networks, but so far Tracfone hasn’t gotten permission from either to use their LTE services, which can deliver data speeds up ten times faster than their older 3G EV-DO systems.

In its earnings statement (PDF), América Móvil said that its big subscriber gains are coming from Straight Talk and its new brand targeting Mexican nationals Telcel América. Both brands offer more expensive plans than Tracfone’s core prepaid service focused on budget users. Consequently, its average revenue per subscriber jumped 16 percent year over year to $19 a month.

There’s no way to know for certain whether the iPhone is driving those Straight Talk gains unless Tracfone starts releasing device figures. But more of the prepaid operators’ customers seem to be gravitating toward higher-end devices like the iPhone and purchasing more expensive service plans.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• Mobile 2012 and beyond
• CES 2012: a recap and analysis
• 2012: Data, spectrum and the race to LTE

FierceWireless first reported on the new plan, but we confirmed the details with Verizon today. The $35 tier targets text junkies using basic phones, offering unlimited SMS and web surfing but only 500 voice minutes. Four feature phones — the LG Cosmos 2 and Extravert and the Samsung Gusto 2 and Intensity III — are available under the plan, and it’s not transferable to other devices. Extra minutes cost an additional 25 cents.

Verizon is no stranger to prepaid, but unlike Sprint and T-Mobile, it hasn’t focused much effort on the segment. At the end of 2012, Verizon had only 5.7 million prepaid subscribers out of 98.2 million retail accounts. In addition, much of Verizon’s recent attention has been directed at the upper tier of the prepaid market — tablets and data modems as well as no-contract smartphones plans.

By delving far below the $50 price tier, Verizon is venturing into the territory of prepaid-only players like Cricket Communications and MetroPCS, mobile virtual network operators (MVNOs) like Tracfone and Sprint’s no-contract arms Virgin Mobile and Boost Mobile. Prepaid has enjoyed enormous growth over the last several years, so you can see why Verizon is interested, though it’s extremely late to the party.

LG Extravert

Verizon’s new love of prepaid likely has something to do with its rapidly emptying CDMA network. Since launching LTE two years ago, 50 percent of all of Verizon’s data traffic has migrated to those new 4G systems. Verizon essentially made 3G a fallback network for its next-generation of high-end smartphone users, and to fill the gap left over it’s only offering prepaid services over 2G and 3G phones.

The four feature phones on Verizon’s basic plan are no exception. While you get unlimited data with the plans, you’d have to try very hard to rack up even a modest data usage on these devices. They sport Opera browsers and a few email and social networking apps, but you won’t get access to any advanced applications. What’s more, they only hold CDMA 1X 2G radios, so connection speeds are quite slow.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• Mobile 2012 and beyond
• CES 2012: a recap and analysis
• A look back at mobile in the third quarter

Speaking to reporters at a Verizon event in New York City, McAdam said the carrier would watch T-Mobile’s new no-contract strategy closely to see how consumers respond. “I’m happy when I see something different tried,” CNET quoted McAdam as saying. “We can react quickly to consumers’ shifting needs.”

Lowell McAdam (right) with Google’s Eric Schmidt

To be honest, you wouldn’t expect McAdam to say anything different. In the past, carriers have expressed dissatisfaction with the subsidy model that dominates the U.S. mobile industry. That model dictates they sell increasingly expensive smartphones at cut-rate prices and thus take a big financial hit when they first sign up a new customer. Eventually they recoup those costs over the course of a two-year contract through higher service fees.

Most carriers have already eliminated subsidies entirely for tablets, and as McAdam points out, they would more than willing to do so for phones, if customers are amendable. That said, Verizon has done quite well for itself with the current system — it has no reason to gunk up the works unless there is some massive shift in consumer sentiment.

There’s a reason why T-Mobile was the carrier to challenge the long-established contract-and-subsidy model: it had nothing to lose. It is the smallest — by a big margin — of the four national operators, and for the last several years it has barely grown. You can call its Un-carrier strategy an act of genius or you can call it an act of desperation, but T-Mobile had to do something and had to do that something quick. McAdam only has to sit back and wait to see if it works. And he’ll likely have to wait a while since many of the customers who might be interested in what T-Mo is selling are still locked into contracts.

So what if T-Mo’s new contract-free plans prove wildly successful? Would other carriers give up on contracts completely? I seriously doubt it. Verizon, AT&T and Sprint may have their issues with the subsidy model, but they also love to the stability of long-term contracts. The last thing they want is a constantly shifting customer base, in which huge numbers of subscribers turn over each quarter. Even if the carriers didn’t have to absorb device subsidies, there are still substantial costs associated with acquiring new customers. They would much rather just lock down the ones they have.

All three carriers offer prepaid services for customers who demand or don’t qualify for postpaid services, and most carriers will sell you a postpaid plan without a contract if you pay for your device upfront. In fact, they benefit considerably if you do so because they’ll charge you the same monthly rates they do for subsidized customers – they get their cake and eat it too.

That’s where I think the other carriers will have the biggest difficulty adjusting to contract-free models. To make that model the work they’ll have to charge lower voice, SMS and data rates to those customers who eschew subsidies. If carriers are no longer recouping the cost of the device, they can’t justify the rates they charge today. Lowering rates is not something they want to do.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• CES 2012: a recap and analysis
• Carrier IQ and the continued erosion of operator trust
• What to watch in mobile in 2013

This strategy differs from the other LTE carriers in the U.S.: virtual network operators buying wholesale airwaves from AT&T and Verizon typically don’t get access to the much faster LTE services. Sign up with any of the TracFone brands, for example, and you’ll only get to use 3G for your mobile web. Keeping LTE for contract customers only ensures a higher, longer-term revenue stream for AT&T and Verizon.

So why would Sprint diverge from the pack of contract carriers and offer LTE to its prepaid brand? Two reasons.

First, it can provide a small boost — no pun intended — to overall revenues by standing out from the prepaid crowd with LTE as an option. If few or no other prepaid brands offer LTE, Sprint stands to gain prepaid customers who value faster mobile broadband over voice minutes and text messages.

Second, and perhaps more important, Sprint quietly adds a second tier of service for its LTE customers. While Boost Mobile advertises unlimited web, the fair-use terms are actually a soft cap of 2.5 GB per month. That plan is $55 a month. Sprint customers that want truly unlimited LTE access can do so on the same network through Sprint directly, for $80 a month with a limited amount of voice minutes; unlimited everything adds another $30 per month.

The new LTE phones for Boost Mobile then, provide Sprint two ways to deliver LTE to its customers, regardless of whether they’re fine with contracts or prefer a month-to-month option. That could sway some to Sprint, which in turn starts recouping its LTE network investments a little faster.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• CES 2012: a recap and analysis
• U.S. Wireless Data Market: Q4 and Year-End 2008
• Mobile 2012 and beyond

GoSmart plans start at $30 a month, including unlimited talk and text. For $5 more a month, you can get unlimited Web access, but only on T-Mobile’s 2G GPRS and EDGE networks. For $45 a month, you can upgrade to the 3G HSPA network and get 5 GB of data, after which you’ll be throttled down to 2G speeds. It’s important to note T-Mo is specifically saying 3G here even though its marketing its HSPA+ network as 4G. The implication is that even GoSmart users on the $45 plan won’t get access to the full bandwidth available over its data networks.

GoSmart is offering only two devices without subsidies, a $50 Alcatel feature phone and a $100 ZTE Android 2.3 device, which is a pretty good bargain for a smartphone. GoSmart’s main go-to-market package appears to be a SIM kit that allows a customer to activate any GSM device they bring to the network. That strategy seems to replicate the SIM services that have proven so successful for Tracfone and other mobile virtual network operators.

But why is T-Mobile creating an entirely new brand for prepaid when it already sells a lot of contract-free plans under the official T-Mobile? The carrier is probably trying to create two distinct classes of prepaid of service so it can tailor its marketing for each. T-Mobile’s branded prepaid emphasizes T-Mobile HSPA+ data network, bigger and faster data plans and higher-end devices.

Meanwhile, GoSmart is clearly targeted at the more voice-centric budget user. Sprint follows the same approach, though its segmented its prepaid services into numerous brands, including Virgin Mobile, Boost Mobile and Assurance Wireless.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• CES 2012: a recap and analysis
• Mobile 2012 and beyond
• Updated: Forecast: global mobile subscribers, 2010-2015

The virtual operator, owned by Latin American multinational América Móvil, is only a third smaller than T-Mobile, and it’s growing a lot faster. TracFone had a bang-up year, growing its subscriber base by 13.3 percent in 2012. Over the holidays it added 753,000 subscribers alone, which beat out every other operator in the U.S. save AT&T and Verizon. Consumers appear to like the cheap no-contract services TracFone is selling.

TracFone managed to grow so big only by the grace of the large carriers. As a mobile virtual network operator (MVNO), TracFone buys wholesale CDMA and GSM voice minutes and 3G data from all of the Big 4 and feeds them into its multiple brands: Straight Talk, Net 10, Simple Mobile, Telcel América and SafeLink Wireless. All of them target different types of consumers – Straight Talk goes after iPhone users on a budget while Telcel targets the Mexican community in the U.S. – but what they all have in common are inexpensive plans sold without contracts.

While there are dozens of new independent MVNOs in the U.S., most of them tend to be modest outfits. One of the most successful of the new breed, Solavei, has only 100,000 subscribers. On the other hand, while Solavei has been existence only a half a year, TracFone has had plenty of time to grow. It outdates most of the modern carriers, launching in 1996 long before the term MVNO came into existence. Back then it was simply a prepaid reseller.

Image courtesy of Shutterstock user Mopic

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• CES 2012: a recap and analysis
• 12 tech leaders’ resolutions for 2012
• The future of mobile: a segment analysis by GigaOM Pro