Something historic happened in the first quarter of 2012. For the first time ever, the major carriers in the US have registered a combined decline in the number of postpaid (contract) subscribers. The total number of subscriptions of the seven biggest telcos in the United States has declined with 52,000.
Sure, that’s not a dramatic fall by any means, considering that AT&T, Verizon, and the other carriers have hundreds of millions of subscribers. But this first drop ever might be a sign that people are getting tired of paying hundreds of dollars every month, for a service that they can get for half or less, simply by sacrificing a little convenience.
What are the causes of this drop? According to mobile industry analyst Chetan Sharma, there are a few likely causes, including the fact that it’s increasingly difficult to get new subscribers in a hyper-developed market, where the subscription penetration rate is hovering around 110%. In other words, most people that want a phone contract already have one.
Another issue would be the economic slowdown of the last years. People are simply more careful about their spending, and many choose cheaper prepaid options, like the ones offered by Cricket, Leap, or Virgin.
And, of course, the discretionary attitude of carriers might have something to do with the decrease of contract subscriptions… Verizon decided to smother unlimited data plans to death, instead of killing them downright, possibly fearing the potential backlash. After Verizon’s new shared plans kick in, on June 28, you won’t be able to get a subsidized phone without giving up your grandfathered data plan.
But backlash is exactly what Verizon got when it announced its new Share Everything plans this week, which many have called out as a method of milking more money from the customer.
AT&T has already announced that it will follow suit with its own shared plans coming later this year. As Sharma suggests, share plans are the future, and we should expect to see them at other carriers, now that Verizon has took the plunge.
Increasingly, Americans take a hard look at their monthly phone bills and decide that something’s gotta give. According to Ars Technica, 25% of American phone subscribers are now on prepaid (pay as you go) plans and the trend is not likely to reverse soon. But the percentage of prepaid users is still very small, when compared with other markets – 70% of subscriptions in Western Europe are prepaid, and the proportion is even higher in countries like India or China.
Our question is – how do you pay for your phone service – prepaid (pay as you go) or postpaid (contract)? For the sake of accuracy, we have two poll questions, one for US readers and one for the readers living outside of the US.
As always, feel free to voice your opinion!