When AT&T, Inc. (NYSE: T) announced that it would feature $3 per day unlimited calling with its prepaid wireless service called GoPhone, it was hard to see the point. After all, competitors in the wireless prepaid space, such as Sprint Nextel Corp.'s (NYSE: S) Boot Mobile brand, already offer unlimited calling for $50 per month. That's all day, every day calling with no long distance or wireless roaming charges.In fact, one of the largest prepaid competitors, Virgin Mobile, was just picked off the market by its longtime partner Sprint for just under $500 million. Sprint wants to play a larger role in the prepaid market -- where margins are thinner than in contract wireless -- so it can bandage the customer bleeding it faces every single quarter.
Why would AT&T even care about playing a larger role in this race? It's already gaining over a million new customers per quarter (quite a few from Sprint would probably be correct), yet it just announced an overpriced prepaid wireless offering that isn't even touching the competition's pricing.
AT&T should get out of the prepaid business by selling its GoPhone division to someone like technically-compatible T-Mobile USA's Deutsche Telekom ownership. That is, if there is interest. It's clear that Sprint and other regional and national prepaid carriers like Tracfone and MetroPCS -- not to mention Sprint's huge new interest -- want this market way more than AT&T does. And, AT&T's pricing is not competitive at all, so it's hard t see where the telecom company's strategy is here. Just jettison prepaid and pay off some debt with the proceeds, AT&T.
Response from AT&T's Rolf Gatlin, 8-12-09, 2:31pm EST:
AT&T offers prepaid wireless to customers to provide them with a wide array of good choices. Some people do not want the commitment of a two-year contract and want the flexibility of paying for wireless service only as they use it. Some prefer to deal in cash, some may have credit issues, some may want to pay for wireless service only on the days they use it but for a competitive price. That's why we offer prepaid service.
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Reader Comments (Page 1 of 1)
8-08-2009 @ 4:09AM
Luis Martinez said...
In some areas they are offering more competitive prepaid plans. For instance, in the Southeast they are offering a $60 unlimited minute/text prepaid option which is almost at Boost's level. From what I've heard it might go national.
8-08-2009 @ 5:00AM
NLR said...
Want to save money but not get tied into a contract? Wireless carrier Page Plus prepaid option 39.95 per month (no additional taxes and fees). Interested? What do you get..? Unlimited Talk and Text and 20MB of media. I'm cancelling my contract and jumping on this. I suggest you do the same (if you don't live in the Mid or North-west) so that way we can see competitive pricing from the major players. Enough is enough! (Also check out Zero1)
8-10-2009 @ 3:34PM
cocoviper said...
@Luis Martinez
$60 regional plans that offer unlimited minute/text are not even close to Boost's level.
In addition to that $60 you also have roaming fees if you leave the city, also taxes, and not to even say anything about data.
Boost is offering $50 flat (no roaming or taxes beyond that $50) plus it is doing unlimited voice minute/text/picture messaging AND data. And it's a nationwide plan. Why are you suggesting someone should pay more to get less?
8-11-2009 @ 6:49PM
e_talkk said...
I recently purchased the ATT $ 3.00 per day unlimited pay as you go GoPhone plan. Coverage, north of Pittsburgh , great, pricing... horrible. $ 3.00 per day when everyone else charges a flat $ 45- 50 dollars per month. ATT executives need to come off there dream cloud and realize these are tuff times, the $ 3.00 unlimited plan is grossly overpriced, same with Verizon Wireless.
8-19-2009 @ 12:17PM
infanta said...
A better choice is Straight Talk, unlimited minutes, unlimited text messages for $45 a month! or 1000 minutes and 1000 texts for $30 bucks a month! e_talkk is soo rite. These are tuff times. Got my Straight Talk at Walmart.
8-22-2009 @ 5:23PM
Wayne said...
All this talk of unlimited this and unlimited that... I recently read a study that suggests that most Americans pay for more than they use when it comes to cell phones. Why would I pay $50 for unlimited? I would still only use the phone two or three hundred minutes a month. Less during most months, actually. That is why I swear by NET10. Always 10c a minute, and I only pay for what I use. Most options work out more expensive than that once all the hidden charges and fees are added. With NET10 there is none of that! No roaming fees, no bills, no evil. ;-)
8-23-2009 @ 7:04PM
Scrively Weiskup said...
I agree. Prepaid makes the most sense. It's more common in Europe that it is here.
I've been looking into Straight Talk and Net 10, actually, but I have a question about Virgin Mobile. Are they offering a low-cost pan for unemployed and other people who need a basic phone w/o the big bills? I keep hearing that they make a $10 a month plan available for those who can't afford more but I don't see it on their site.
Do they have it? If so why don't they announce it?
ANyone know?