Telecom giants and industry leaders were at the All Wireless and Prepaid Expo 2023 in Las Vegas August 14-16, discussing and presenting sessions on prepaid wireless, which is seeing an explosion of consumer adoption.
So what’s happening in the prepaid sector, and why? iQmetrix was in full attendance at the expo, exploring the sessions and talking to clients and industry professionals.
Three key trends emerged as the hottest topics of discussion among the keynote presentations, panel chats, and networking receptions.
1. Prepaid is biting at postpaid’s heels, with rapid growth in subscribers.
The overarching message? Prepaid is growing fast (as are wireline/cable companies, but that’s another topic for an upcoming post). This is taking away from postpaid subscribers, with a more rapid growth in customers than postpaid counterparts, and some aggressive growth plans in play, especially from Total by Verizon.
Total by Verizon “plans to open more than 100 stores in the Los Angeles area in 2023,” according to L.A. Business First. Cricket also gained three new stores between November and May.
Jeff Moore of conference organizer Wave7 Research, who presented a session titled The US Prepaid Market in 2023, said it was worth noting that neither AT&T (Cricket) nor T-Mobile (Metro by T-Mobile) has had a losing quarter in terms of prepaid customers since 2020, except for a slight loss by AT&T in 4Q22.
That said, as in every sector, there are some bigger winners than others. Moore added that Dish’s prepaid brand Boost has lost 2.1 million subscribers over the past three years, while Verizon has lost 1.2 million subscribers over the past two years — and during those time frames, neither carrier has had more than one positive quarter.
Here’s the breakdown by carriers’ prepaid customers:
- Verizon’s prepaid brands — Visible, legacy Verizon Prepaid customers, Total by Verizon, legacy Tracfone customers, Straight Talk, Simple Mobile, SafeLink, Family Mobile (Walmart — formerly T-Mobile) — total of 21.6 million
- T-Mobile’s prepaid brands — Metro by T-Mobile, legacy T-Mobile Prepaid customers — 21.5 million
- ATT’s prepaid brands — Cricket Wireless, AT&T Prepaid — 17.6 million
- Dish’s prepaid brands — Boost, Gen, Ting — 7.73 million
- Plus MVNOs such as Mint and Ultra, and regional carriers such as US Cellular and C-Spire
2. Rapid growth in prepaid stores means these new retail operators need to think about scalability.
It’s a brave new world when it comes to wireless store locations. A typical prepaid retailer is an entirely different beast than the industry is used to seeing in experienced postpaid business operators. Why? Prepaid retailers have very different priorities — at least at this early, rapid-growth stage.
Jason Raymer, Senior Vice President of Revenue at iQmetrix, said, “A lot of these prepaid retailers are thinking only about the transaction, because that’s truly all that matters to them right now. So, while these folks are rapidly setting up stores, it’s important to also think about how they scale their business operations longer term, if they want to succeed.
“They need to think beyond the transaction to ensuring they have the right tech stack for the future. One that has turnkey integrations, powerful reporting, security in today’s climate, flexibility, and stability. How do they grow their marketing to customers — which a lot of these sessions were talking about — if they don’t have the right solutions in place to scale?”
The above is true of any rapid-growth retail operation, but especially of prepaid wireless, where unique factors — such as unbanked customers needing to pay cash, for example — create new challenges not seen in the postpaid sector.
Added to that, the complexities of operating multiple stores in a high-product-value, low-profit-margin retail vertical can be tough to manage without a robust system of business analytics. “It even plays into fraud prevention,” added Raymer. “If they don’t have the right reporting behind the transaction, they can’t manage their costs and losses in the already low-margin business that everyone was talking about. As they want to grow stores, they need technology that grows with them that’s easy to roll out.”
3. Prepaid is helping bridge the digital divide for marginalized communities, but there’s still a long way to go.
In today’s tumultuous economy, where consumers are increasingly struggling to make ends meet and the gap between the haves and have-nots continues to widen, prepaid is helping to bridge that digital divide.
By using pay-as-you-go rate plans that don’t require credit checks, lower-income customers can access essential wireless services, and telecom networks are answering that need. Carriers are building out their infrastructure to reach underserved, rural, and socioeconomically challenged communities. In turn, this connectivity creates new opportunities for those populations and helps further close the divides.
How will those customers afford to pay for those services once they are available in their region? The Affordable Connectivity Program (ACP) presented a session on its federal program, which provides a benefit for eligible households toward their internet or wireless service. It cited 30 million U.S. households are without internet, meaning many millions of residents with zero online access to education, working from home, healthcare, resources, and online government services.
The ACP urged network operators to not think of the program as cutting into the prepaid market or reducing revenue-per-unit, but instead think of it as a new payment method that offers an opportunity to add on or bundle.