) prepaid customers may soon be able to experience 4G speeds,
according to popular technology website Droid Life. The carrier is
likely to introduce 4G for its prepaid users as part of its Allset
plans on July 17. It was apprehensive in offering 4G to its prepaid
users earlier, likely because it was concerned about cannibalizing
its relatively costlier postpaid plans. However, the company seems
to have changed its earlier stance due to rising competition and
declining net subscriber adds.
Verizon is currently the only major carrier in the U.S.
which does not offer 4G services to its prepaid users, and this is
acting as a major disincentive for prepaid customers when opting
for the carrier's service. This was reflected in the first quarter
this year when Verizon's net prepaid user adds declined by 76% from
the prior year quarter to 10,000, and net postpaid user adds
declined over 20% to 539,000. This was the carrier's worst
performance in terms of subscriber net adds in the last two years.
If the carrier expands its 4G service to prepaid subscribers, it
could witness an improvement in net adds in the near term. However,
with competition in the prepaid market heating up, Verizon will
also have to keep its pricing at attractive levels to witness any
We have a
$50 price estimate for Verizon
, which is in line with the current market price.
See our complete analysis for Verizon
Will Prepaid Users Get XLTE ?
Verizon's Allset prepaid plans start from $35 for feature phones
and $45 for smartphones. The $45 plan features unlimited voice and
text with 500 MB of 3G data, and it is expected that users will now
have the option of accessing its 4G network as well. However, it
remains to be seen whether the 4G on offer will be the carrier's
normal LTE or its upgraded XLTE. The company claims that the XLTE
network can potentially be twice as fast as its existing 4G
network, depending on user location. It recently reported that
its upgraded LTE network has now spread to more than 300 markets
across the country.
Carriers Focusing On Prepaid
With the high-end smartphone market largely saturated and
postpaid subscriber growth slowing, the top four U.S. carrier are
increasing their focus on the prepaid market. While some are
looking to consolidate the prepaid market, others are adding
popular smartphones to their prepaid lineup and revamping their
pricing strategy to gain market share.
Over the past year, two big mergers have happened in the prepaid
segment: AT&T's acquisition of Leap and the T-Mobile/MetroPCS
reverse-merger. Sprint also started offering the iPhone on its
Boost prepaid platform late last year, having already introduced it
on its other prepaid brand, Virgin Mobile, in mid-2012.
Verizon has traditionally focused more on postpaid and so far
kept its prepaid plans 3G-only to avoid postpaid cannibalization
but it tweaked its prepaid pricing strategy towards the end of
last quarter to include lower data tiers and attract more prepaid
subscribers. We expect its recent efforts to help the carrier
slowly improve quarterly net adds in the prepaid segment and
effectively compete with rivals.
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