JD Power Study Suggest Potential for Huge Prepaid Wireless Shift

About 16 percent of prepaid wireless users have switched carriers in the past 12 months. Some 51 percent of those switchers previously had contract service, a new survey by JD Power and Associates says.

About 12 percent of those surveyed said they would switch carriers sometime in the next year, compared to 13 percent in 2008.

Among those intending to switch, 24 percent intend to switch to contract service. That suggests 75 percent of switchers would consider prepaid plans.

And there are clear differences between "pay as you go" users and prepaid customers, suggesting two clear niches. The study also finds the average pay-as-you-go user is older, more likely to be retired and has fewer wireless phones in their household.

The monthly prepaid plan user more closely resembles the contract plan user, desiring a large network, mid-range feature phones and messaging, but without the commitment or penalties of a contract.

That is likely the most significant finding, as it suggests the real difference between prepaid and postpaid users is in fact not so much ability to pay or demographics as it is preference for terms of service.

That is not to say some prepaid users are "credit challenged" or lower income. But the survey suggests the potential prepaid audience is quite a bit larger than it has been in the past. "Mainstream" postpaid users might in fact be persuadable candidates for prepaid.

About 66 percent of prepaid users who renew monthly report that they have cut ties with their former contracted service carrier. That suggests huge possibilities for market share shifts as well.

Pay-as-you-go users spend an average of $35 for each airtime purchase, a decrease of $5 from 2008.

Monthly non-contract users spend an average of $25 less per month than those with contracts do. They report spending $56 per month compared with an average monthly service cost of $81 for contract users.

Non-contract customers report using 320 minutes per month—a notable increase from 233 minutes in 2008.

Pay-as-you-go users report using an average of just 145 minutes, while monthly non-contract users report an average of 573 minutes per month.

According to the study, more than 40 percent of non-contract plans are monthly plans, compared with less than 30 percent in 2008.