Verizon Cuts Prepaid-Plan Daily Pricing, but Doubles Texting Rate

 
 
By Michelle Maisto  |  Posted 2010-12-09
 
 
 

Verizon Wireless has cut the pricing of its prepaid daily voice plan from $3.99 to $1.99, and doubled the texting rate on the plan from a penny to 2 cents, Fierce Wireless first reported.

The plan also offers unlimited mobile-to-mobile calling, as well as unlimited night and weekend minutes. And as with all of Verizon's prepaid daily plans-there's also a 99-cent plan that charges 10 cents a minute, plus 10 cents per text, and another without a daily rate but that charges 25 cents a minute and 20 cents per text-users pay only on the days they use the phone. There's also no long-term contract, no deposits and no credit checks.

"The new plan portfolio was simplified and I think it's a direct response to AT&T's plan enhancement done in October," Current Analysis analyst Maidy Whitesell said on the research firm's site, in response to the price cut, according to Fierce Wireless. "The fact that it [Verizon] restricts its available handsets with its daily plans is a clear indication that it's preventing any possible cannibalization from customers in higher end plans. Overall, I think the move is positive because the carrier wants to be competitive in the prepaid arena, but it does not seem that it's ready to compete in terms of pricing, at least not yet."

The tech site notes that Verizon lost "137,000 prepaid voice subscribers" during its third quarter, but Strategy Analytics analyst Ken Hyers points out that those are retail prepaid customers.

"Its prepaid wholesale customer growth has been phenomenal," Hyers told eWEEK. Additionally, with new wholesale customers-such as those coming to the Verizon network through its MVNO (mobile virtual network operator) partner TracFone-Verizon saves on acquisition costs, marketing costs and customer-care costs. What it might lose out on, of course, is customer loyalty.

Hyers added that the price drop, in part, might also have been designed to enable Verizon to better compete with TracFone, which charges $45 a month. A Verizon prepaid customer, if he or she was using the phone every day, was previously paying $120. Now, that same cost would be approximately $60-a 50 percent saving.

"When you think about the demographic that's heavily into prepaid, it's the youth market," he said, "and they're heavily into texting."

Still, said Hyers, "It's not something where they said, -Oh my gosh, we're losing so many customers, we have to do something'"; even the consumers it "loses" to TracFone are still using its Verizon network.

Retail postpaid customers made up 88 percent of Verizon's network during the third quarter, and 23 percent of these customers had smartphones. Also during the quarter, Verizon added 997,000 total net customers, 584,000 of which were postpaid retail customers. In total, Verizon customers sent or received 183 billion text messages during the quarter, sent 3.8 billion picture messages, and completed nearly 22 million music and video downloads. It nonetheless saw profits fall 25 percent during the quarter and revenue dip nearly 3 percent.

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