Advantages of Prepaid Handsets Include Flexibility and Privacy
Recent TraQline figures indicate that prepaid cellphones account for 30 percent of cellphone purchases. This number is up 9.1 percent from June 2013. At that time, households making less than $35,000 annually were the most frequent users of prepaid phones. The story now is different, as the rise in prepaid has spread to all income levels. There may be several reasons to account for this change:
- Flexibility and Selection
- Quality, Budget Friendly Service
- Increased Number of Children Using Cell Phones
- Business Use
Below, we’ve explored each of these reasons in greater depth:
1) Flexibility and Selection
First, consumers across all income brackets place great value on flexibility, as an article in U.S. News & World Report explains. Many would rather not be tied down to a carrier if possible, and the selection of prepaid phones has grown to the point where all types of consumers feel they have enough options to purchase a phone they will enjoy. Even iPhones are available as prepaid devices.
2) Quality Service and Cutting Costs
The ability to switch carriers without massive termination fees is also appealing. Because many prepaid carriers lease their access from big carriers, consumers can still expect quality service in both rural and urban areas. In addition, numerous carriers used to subsidize phones with huge incentives. For example, consumers could buy a phone for $100 if they signed a two-year contract. These use of subsidies by carries is a thing of the past as they move towards a lease based system.
3) Increase in Children Using Cell Phones
Another possible explanation for the rise in prepaid phones may be the fact that parents are purchasing phones for their children. Children are receiving cell phones at increasingly young ages. Currently, more than half of children between the ages of 8 and 12 have a cell phone and they were most likely to receive these phones at around 10 or 11 years old. Many of these phones are prepaid because is it easier to monitor the usage of the minutes. There are no surprise charges, and parents can reload minutes if they want. Meanwhile, children learn about budgeting their time and about planning ahead to ensure their minutes last.
Privacy may be another reason for the uptick in prepaid phone purchases. Some consumers may be using their prepaids as burner phones—for one purpose only. For instance, they might use their phone solely for dating apps such as Tinder or to have a phone number handy for online purchases and subscriptions. This move enables them to sidestep calls from telemarketers. Furthermore, prepaid phones do not require income and credit checks. This makes them especially appealing to people who are worried about being tracked or who are concerned about their general security. The less a company knows about them, the better, or so the thinking may go.
5) Business Use
Adding to the picture is the fact that some businesses are skipping the landlines and going right to cellphones—prepaid cellphones—that they use only for business. For one thing, cellphones offer advantages over their landline counterparts, such as texting. Businesses are easier to reach and become more consumer-friendly in a world where instant access is the norm. There is also the fact that going the prepaid route compared with the contract route can also be more budget-friendly, an especially important approach for new businesses.
The rise of prepaid phone purchases shows that consumers are taking advantage of their options. Whether they want to limit children’s minutes, have a devoted phone for business or personal use, or value the lack of strings with a prepaid, consumers have many reasons to purchase prepaid devices. Additionally, cell phone carriers moving away from multi-year contracts could encourage consumers to explore multiple options. What do you feel are some of the benefits (or drawbacks) of using prepaid cell phones? Let us know on twitter (@TraQline) or on LinkedIn.