Pay Me Now or Pay Me Later

Prepaid mobile services have been around for quite some time in many countries worldwide. This financial model offers cellphone services for those that either cannot or choose to not opt for postpaid plans. Pay-as-you-go of sorts. This was the first plan my kids got on cellphones and as their financial ability, but at least as important, their usage increased, they then migrated to postpaid plans with the appropriate size buckets of voice minutes and SMS texts (for my daughter, UNLIMITED!).

As long as the plan had the right balance of bucket size and payment size (a perceivably good price-performance on what you get), then prepaid remains an attractive option for many of us. Usually the biggest advantages are the lack of contracts or commitment periods associated with postpaid, although some wireless operators (usually MVNOs like Virgin Mobile and Cricket Wireless) offer postpaid plans without contracts or commitments.

The first basic question that prepaid users ask is, “do I use the service enough to justify a postpaid plan?”

  • Will they talk or receive calls on the cellphones to go for a higher minute plan?
  • Will they need some more advanced features that only postpaid plans offer, such as 3G data?
  • Or do they need to have just enough connectivity with a mobile device without taxing their monthly budget?

There is another large group of devices that have been coming online that are asking the same question. The mobile compute platforms such as laptops and netbooks (or the cleverly named smartbooks such as HP and Qualcomm’s recent announcement) are increasingly being connected to mobile networks in addition to WiFi.
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There is a recent flurry of noise from the mobile operators on prepaid mobile broadband plans with megabyte and gigabyte buckets available for as little as $10 for 100 MB, in the case of Virgin Mobile USA. But the larger operators such as AT&T Wireless and Verizon Wireless will offer prepaid mobile broadband to complement their postpaid options. I think prepaid as an economic model is ABSOLUTELY made for:

  1. connected platforms now such as laptops (to avoid the “everything they can eat, and they will” problem operators encounter with data hogs)
  2. emerging connected devices later such as cars, gaming platforms, eBook readers (bundled today in the Kindle but I predict this will change)
  3. many other multimedia and entertainment devices…can you say iSlate?

Recently Tariff Consultancy published a report stating that:

“Pre Pay Mobile Broadband will become the norm for the majority of users to access the Internet worldwide, with a third of a Billion users by the end of 2013″

The notion of “becoming the norm” is the operative phrase here. Similar to how cellphones have become the norm for communications and ultimately having resulted in cannibalizing fixed line services, is it feasible to think that mobile broadband will cannibalize fixed line Internet access? At a minimum, it will be complementary in that high use devices such as media servers, Hulu, Playstation Online, torrent servers, or groups of PCs and Macs will demand more than what the mobile network (or even local femtocells) would be capable of providing. But in either developing countries or smaller connected households, the advent of $10 or $20 (or even less in some countries) to last a month or two for web and email connectivity is more than sufficient to serve their needs.

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