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Verizon Wireless(s vz)(s vod) has always stuck to the premium of end of the mobile pricing spectrum, leaving budget prepaid plans to its competitors. But it may be changing its strategy. On Thursday it introduced a $35 prepaid plan, which is by far the cheapest thing it offers under the Verizon logo.
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(s s) 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(s leap) and MetroPCS(s PCS), 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.
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.