Cell Tower ExtremeTech

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!

[poll id=”106″]

[poll id=”107″]

Bogdan Petrovan
Bogdan is the European Managing Editor of Android Authority. He loves tech, travel, and fantasy. He wishes he had more time for two of those things. Bogdan's phone is a Nexus 6P.
  • Outside US (Germany) and Prepaid. Contracts are in most cases way more expensive than buying an unlocked phone and use a good prepaid card. It also gives you the freedom of usinig your phone anywhere in the world and constantly switch the cards to stay with the cheapest and most reliable networks. Once people switched to prepaid the carriers also dropped their prices a lot since the competition began. Signing a one or two year contract is the worst thing people can do for competition…the carriers know they have you for that amount of time.
    With prepaid the customer can switch every day, and they know that…

  • Jacob Guo

    My coworkers were surprised that I shelled $550 for a new Samsung Galaxy S II in January but i did the calculation of the savings I’ll make and decided this was the best deal. I also happen to travel to various countries where I need a phone and this helped with my decision as I hate looking for a phone to use outside the country in the Caribbean, South America or Europe. With my S II, I can easily buy a SIM card, usually cheaper for prepaid, and just add my minutes as I need. Paying $40 a month on a prepaid career is a lot cheaper and easier that paying $70 and above. I am really happy with my phone and services I get from the provider as I get unlimited Data, unlimited International texting and also talk and regular text, all for $40, how can you possible beat that?

    • Techfeenz

      Many people can not understand the math though, but I do. I moved to Straight Talks BYOD program where they give you a sim. I now pay 45 bucks a month and have THE hottest Android phone on the planet. The international GS3 on the blazing fast HSPA+ 9mbps on ATT. Compare that to My Sprint account I signed a while ago to get a GS2E4gt at 80 bucks on 0.02mbps of EVDO or 1.2mbps of Wimax 4g. Here is a video I made about the difference between speeds

      http://www.youtube.com/watch?v=bsNggiZeZ6I&feature=plcp Im on Straight Talk and I moved my wife to prepaid on Virgin a while ago but we dumped its slow Sprint 3g network for Straight talk also. When I want to upgrade I save my money and pop in the Sim. Contract is dead. No matter how good their phones are when I can have the latest before they get them their contract is useless to me.

  • Abhisshek Das

    we Indians use prepaid for over 10 to 12 years. 95% mobile subscriber in India use prepaid connection. if any one use post paid connection we laugh at him/her very hard ^_^ , and sarcastically called them in Punjabi ” Buddey Lok, Buddey Baatein” Means “Rich dude/ douche-bag , Big Hi-fi Style”

  • I had 4 lines on an AT&T contract and i was paying almost $500 a month for overages and other charger i moved all my numbers to Simple Mobile now I am paying exactly $160/month and now i can map out my spendings and know exactly how much i am going to spend on my cell phone bill instead of trying to guess the amount. Pre-paid is now the best out there!!!!!!

    • tBs_Battousai

      $160 (£100ish) a month?!?! what the cr*p do you get for that? here in the uk I pay £35 a month for unlimited calls and texts and 750mb of data and I feel ripped off!!

      • gopadge

        He does have 4 lines. My guess would be him, the wife, and two kids.

  • sn0wbaLL

    why aren’t there any comments from post-paid people? Shamed much? lol, jk. I know its tough to shell out 800 for a phone like the GS3, but it’s worth it in the end. But the current generations doesn’t really care about the “at the end” part, we care about now..and that’s sad. Anyway, +1 for pre-paid

    • Seth Forbus

      I’m on a contract with sprint and my Upgrade was used on the Samsung Galaxy S ll. I pay 80$ for unlimited everything (including data) and I still just paid over 700$ for a Galaxy S lll. The irony? I’m Verizon Wireless Prepaid Tech support. Our plan is 80$ a month for unlimited talk + text and 1GB of data. Did I mention my sprint phone has equipment protection? 100$ deductible if the damage is my fault otherwise free replacement. Prepaid only makes sense if you can’t pass a credit check.

      • sn0wbaLL

        good 4 u. I’m from Europe and we all use pre-paid. Maybe we all have bad credit? NOT! But whatever suits your needs

        • Seth Forbus

          I meant in America. Not sure how the prepaid scene is in other countries. *shrugs*

          • sn0wbaLL

            yeah, dif countries got dif rules. sall good.

      • gopadge

        I pay $50 for unlimited everything and I’ll save the cost of you Galaxy S III over your 2 year contract.

      • George in NY

        “Prepaid only makes sense if you can’t pass a credit check.” Oh how not so! You would be hard pressed to find a higher credit rating than mine, humility aside, I use Verizon pre-paid and choose .25 a minute. I put $100 on mine, $100 on second for wife, good for year. My bal end of year $20, hers usuallu $60. Simply we don’t talk on cell much. Having a cell is a necessity, using it attached to ear not so much. I carry wi-fi Itouch or Ipad for getting mail etc on go. Use free wi-fi spots.

  • function69

    Been pre-paid for 3 years now and loving it.

    • Abhisshek Das

      why would any one down vote your comment !!!????

      • Lulzsecs

        why would anyone care enough to comment about this!!!????

        • Abhisshek Das

          but you still did that . what an Irony . btw you id is Lulsecs really !!! hahahahaha, anyway have fun ScriptKiddie :P

  • Justin

    The prepaid providers in the US pretty much suck. They have horrible (or no) reception in most areas. They may be an option if you’re in an area that is well covered and don’t plan to go anywhere, but not if you ever travel or don’t live in one of the few places they actually have good coverage. People don’t go to more expensive providers like Verizon because they want to, they do it because they want to actually have a signal when they are going to make a call or get on the web. If any real providers suck up the cost to make a good network in the US, I’m sure a lot more people will go to them.

    • gopadge

      I’m not sure which providers you’ve looked at, but I’ve been using T-Mobile’s Monthly 4G plan almost three years now. I’ve traveled from Kansas to Dallas, St. Louis, Mobile, Tuscaloosa and Pittsburgh without issues.

      I know that Boost and Virgin are run on Sprint’s network, and their coverage is pretty thin. AT&T’s Go Phone have surprisingly good voice coverage, but their 3G service on prepaid looks ridiculous. Most of their 3G coverage appears to be in the western half of “fly over” country. Verizon’s prepaid coverage map also looks good, but it looks like they only offer feature phones for the service.

      • Justin

        My friend that lives just a couple of miles from me is on T-Mobile and can’t make voice calls from insider her house without using VOIP over wi-fi. Sprint is who I have now and I can’t make calls from in my house without going upstairs. 3G is not what I’m looking for, even if it were reasonably priced… not to mention that I’ve had AT&T as well, and they also have poor coverage. The “Mountain West” region of the US just suffers.

  • Angelvsqz

    i was surprised to find out via this article that iternational users are more on prepaid…never wouldve thought !

  • I paid £200 for my sim-free, unlocked Motorola Milestone 2 – put a PAYG SIM card in there, and have been using it for almost 3 years. If I need net access, I am constantly surrounded by free Wi-Fi, and I purchased iGo8 (offline sat-nav with voice navigation)

    Never had a contract phone, don’t see the point of them in an age where free Wi-Fi is everywhere. In addition, my network provider gives me ‘free credit’ when I top-up.

  • Im absolutely on Pre-paid. I will admit that initially I got on Metropcs due to my lack of credit but now my credit is outstanding, my savings is outstanding and I am still on Metropcs. I have a droid 3 that I use and only pay $40/month and I get free unlimited data, web, text and talk. I will admit when you flash a verizon phone to Metropcs CDMA network I don’t get features like MMS but I can download apps to send and receive MMS or just send it to people Gmail accounts.

    I laugh at people who claim that only people with horrible credit uses Pre-paid services. Many of you all with outstanding credit should look into getting pre-paid service. That way you can have outstanding credit and exhibit outstanding money management skills as well.

  • Roddisq

    In Brazil prepaid minutes are way more expensive than contract. Usually people buy minutes when they have some money otherwise they just receive the calls or to make calls within their own network with “bonus” minutes. Down here If you really use your phone to call different networks you have to go contract, otherwise they will rip you off.
    Most of the companies give a discount on a new phone but usually it is not worth it. I bought my S2 from another source other than the carriers.

  • DragonsKindler

    I’m now on Virgin I pay $35 for 400 min unlimited txt/data. Moto Triumph (CM7) $250 for the phone. I use maybe half the mins.
    My last phone on AT&T, HTC Pure, I payed $400 for the phone and poped a PayGo SIM $40 month Unlimited Talk/Text no data.

  • changefulfiber85

    I was prepaid for 11 years until last year, then saw an offer that I thought was worth switching over for. On Three Ireland, for €40/mth (US$50) on a two year contract I got a free Galaxy S2. My monthly plan gives 3,000 anytime same-network minutes (voice & video), 150 evening & weekend any network minutes, 350 anytime any network flexi-units (1 unit = 2 SMS or 1 minute) including to calls to UK, free international roaming in 6 countries & the best part: 2TB (terrabytes) of data – unrestricted, unthrottled and includes tethering as much as you want. Speeds are usually 2-8Mb/sec HSPA+. There aren’t many mobile networks these days where you can download 120GB of data and only have used like 5% of your cap!

    Needless to say there are contention issues in some areas, but I would definately recommend Three to anyone in Ireland. In fact, their prepay offer is just as good value: A €20 (US$25) topup gets you for 30 days: 3,000 same-network minutes (voice & video), unlimited free calls to any network on weekends, unlimited free SMS anytime to any network, and the best part, truely unlimited, unrestricted data (they say you aren’t allowed to tether but it works perfectly).. and an extra €5 free credit for the first 6 months you’re with them. And after all that, you still have your €25 credit to do what you like with (it doesn’t expire). Plus they have the best 3g coverage in the country & have a roaming agreement with the network that has the best 2g (99.5% population coverage) & at no extra charge. BTW I don’t work for or have any affiliation with Three

  • RheannonsaysHi

    Here in Ireland, pay as you go is the way to go (at least for me). Like one commenter already mentioned, Three has a deal where you pay 20 euro a month for unlimited data and texts to any network, free Three to Three calls, and unlimited any network weekend calls. It’s hard to beat that.

  • darkraider

    Been using the T-Mobile $30 prepaid since I got my Nexus and no problems till now. Unlimited 4G till 5 GB, own my phone and can do whatever I want. They have since discontinued this option after the uncarrier approach; but I am grandfathered in and am not changing my plan.