Mobile follows the economy

In mobile, postpaid connections rise while prepaid declines

Over the last year, postpaid mobile subscriptions have been booming, while prepaid — once the strongest area of mobile growth in the U.S. — has been slowly dropping off, according to communications market researcher ShareTracker.

According to ShareTracker, postpaid net additions among the mobile carriers has increased 156 percent between 2013 and 2014. Postpaid used to mean contracts, but today it’s any manner of plan where you pay after your billing cycle. Meanwhile prepaid — service where you buy voice, SMS and data ahead of time  — saw an average decline of 35 percent, ShareTracker found.

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As you might expect, prepaid and postpaid tend to track the U.S. economy. During the recession, prepaid growth jumped dramatically, but now that the economy has recovered, postpaid is returning to growth.

2 Responses to “In mobile, postpaid connections rise while prepaid declines”

  1. DataXoom

    In addition to economic growth, believe there are three key factors driving this trend. First, creative, pay-as-you-go pricing models allow consumers to get the top new devices for $20-25 per month. Second, incredible price competition for monthly service in the retail, post-paid market, which is minimizing the pricing advantage of prepaid. Third, the audit and subsequent decline of the Government’s Lifeline phone program, which was a major driver of pre-paid growth for the wireless carriers.

  2. It’s the handsets and the ways they are “sold”. Prices are up to twice as much as they could be if the market would be allowed to function while in postpaid prices are hidden.
    Another problem is the decline of small carriers and the lack of competition.
    You could also factor in the pricing curve for unlimited voice and texts, it matters when it gets affordable enough.
    More children having phones might also impact the numbers.

    The economic growth in the end is meaningless today in the US, the bulk of the people aren’t benefiting much from it, if you income inequality , average income for the 99% (so excluding the plantation owners) , you’ll see how misleading that growth is.
    The market and the society are dysfunctional so the obvious explanation doesn’t apply.