Has the decades-long growth of the U.S. prepaid mobile phone business hit its limit?
The assumption, over more than a decade, has been that prepaid would continue growing, as a percentage of total mobile accounts, for several reasons.
In most markets, incremental users tend to be lighter users, more cost conscious users and therefore tend to spend less on a product.
Recently, postpaid services have become more competitive with prepaid services, making the type of payment plan a possibly lesser adoption factor.
The ability to buy postpaid service without a contract, for example, also narrows the gap between prepaid and postpaid. Traditionally, one advantage of prepaid was that using it did not require users to sign a contract. But service without a contract now is possible in the postpaid realm as well.
And promotions linked to the U.S. mobile marketing war mean the price of using postpaid has dropped.
At least two of the top-four service providers also are less stringent about credit policies, traditionally one reason many consumers use prepaid.
Inability to offer the Apple iPhone undoubtedly slowed demand for prepaid services as well.
Some leading prepaid brands are encountering dramatically slower growth, while repaid revenue and subscriptions seem still to be growing, but at a slower rate.
Growth continues, but at a very-slight rate, so a reasonable assumption, based on history, is that the trend will continue.
Over the past decade, prepaid plans generally has been growing. In 2014, T-Mobile US said it was the largest prepaid provider in the U.S. market. And many forecasts suggest U.S. prepaid revenue will keep growing.
Sprint's most recent quarter showed a loss of a net 201,000 postpaid phone accounts during the quarter and a net 546,000 prepaid phone, and 349,000 net prepaid tablet accounts. The trend is clear: Sprint is losing postpaid and gaining prepaid accounts.
T-Mobile US, in its most-recent quarter (first quarter of 2015), added 991,000 postpaid phone customers and 134,000 postpaid mobile broadband customers.
T-Mobile also added 73,000 branded prepaid customers quarter, as well as 620,000 wholesale customers in the period, including 479,000 mobile virtual network operator customers and 141,000 M2M connections.
So one might conclude that, at Sprint, prepaid net additions continue to accumulate. At T-Mobile US, prepaid net adds vastly lagged postpaid additions.
So maybe T-Mobile US is converting prepaid users to postpaid, even if Sprint continues to grow prepaid share.
The prepaid market seems to be at a point where future growth could go either way: up or down.