This announcement can be seen as further evidence of the saturation of the U.S. mobile market. Verizon had long focused almost exclusively on driving customers into postpaid 24-month contract plans, relying on its superior network reliability to compensate for its higher prices. While this strategy will still generally remain in place (Verizon’s prepaid plans will still be more expensive than those of its rivals), it appears that the operator has been forced to become much more flexible. Compared with the first quarter of 2013, Verizon saw its postpaid subscriber adds decline by 20 percent and its prepaid customer adds down 76 percent. Beyond the general saturation at the high end of the U.S. market, a confluence of factors has worked against the operator: the availability of better preowned smartphones that do not necessitate operator subsidies, increasing consumer discomfort with committing to long contracts and aggressive smaller operators (particularly T-Mobile) willing to push the envelope in terms of price and included plan features. It appears that its increasing marginalization in the more dynamic prepaid market finally forced Verizon Wireless to risk cannibalizing its own postpaid revenues by offering LTE-enabled prepaid plans.
The above item appeared in a recent issue of The Tarifica Alert, a weekly resource that analyzes noteworthy developments in the telecoms industry from around the world. To access all of the latest articles and issues: http://www.tarifica.com/TarificaAlert.aspx