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Consumer Habits Continue to Shift Away from Contract-Based Wireless

Fri, 10/08/2010 - 10:04am
WASHINGTON, D.C. -- The shift in U.S. consumer habits that started in the fourth quarter of 2009 away from contract-based (or “post-paid”) wireless in favor of less expensive no-contract (or “prepaid”) cell phone service is going to pick up even more speed in the balance of 2010 and in 2011, according to the New Millennium Research Council (NMRC), an independent telecommunications and technology think tank.

Three important trends – the recent emergence of “flexible pricing,” for prepaid, the entry of smartphones in the prepaid space, and the full-scale adoption of prepaid by big-box store retailers – will work to result in even more consumers dumping higher-priced contract-based wireless plans in favor of thrifty no-contract alternatives, including those providing unlimited talk/text/email/Web service for $50 a month or less.

The forecast from NMRC carries special weight since the organization was the first in March 2009 to forecast a major recession-related shift in consumer habits from contract-based to no-contract/prepaid wireless. In March of this year, NMRC reported that the 4th quarter of 2009 marked the first time that the number of new prepaid wireless customers in the U.S. outnumbered new contract-based cell phone providers, according to industry data from both Ovum/Datamonitor and IDG.

Based on the ongoing recession and the recent surge in attractive prepaid phone deals, NMRC said that it expected the trend in favor of prepaid cell phone use to continue throughout 2010.

(For more information, see http://newmillenniumresearch.org/news/033110_prepaid_trends_news_release.pdf.)

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