Prepaid Cellphones Are Cheaper. Why Aren't They Popular?
Prepaid is an interesting beast. In most of the rest of the world, telcos regard prepaid as a plague and only really offer it as a goteway to "postpay". Postpaid customers are predictable future revenue.<p>In Australia, I was with Telstra, which has by far the best coverage. I was on cotnract. The reason? For $50 a month I basically got (for me) unlimited voice, text and Internet (2-3GB/month). but the 32GB iPhone 4 only cost me $300 with $100 rebate. The handset outright cost $950 IIRC so for $1400 I got the handset and 2 years of service. I don't think I could've gotten two years of service for $450.<p>In the US I originally went with AT&T as they were the only GSM network that supported the iPhone (T-Mobile could support it on Edge; Verizon and other models came later). Coverage kinda sucks in NYC, really sucks in the Bay Area but in most of the rest of the country is fine.<p>This was originally month-to-month but ultimately I figured I may as well get the 4S on contract (the discounted price plus the ETF worked out to be no more than the outright price anyway if I cancelled early).<p>But prepaid? That tends to relegate you to "inferior" networks in the US. T-Mobile and Sprint can give good deals but have really patchy coverage. MetroPCS, as far as I can tell, exists solely for drug dealers and pimps.<p>One difference is that in most of the rest of the world you don't pay to receive calls. This makes having a phone and not using it much (to make calls) much more viable. Also texting rates in the US are essentially extortionate.<p>Other countries (Australia and IIRC the UK at least) seem to more heavily discount handsets. It seems like people most often buy the phone that is $0 upfront on whatever plan they want (or they bump their plan up to where it is $0 upfront). The iPhone changed this dynamic somewhat whereas most people seemed to view phones as interchangeable previously.<p>This article is right about one thing: people do seem to put too much importance on the upfront cost. I see things like the latest gen iPhone is $99 upfront and the previous generation is $49. For $50 you get older hardware that will be obsolete a year earlier... for something that'll probably cost you up to $2000 (or more) over 2 years anyway.