People Aren't Ditching Cellphone Contracts for Prepaid Devices—Yet

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Long-term smartphone contracts are expensive and make carriers buckets of money. A report indicates that people are slowly wising up: In the first quarter of this year, carriers lost contract subscribers for the first time ever. Is this the beginning of the prepaid future? Not exactly.

According to the AP:

The seven largest U.S. phone companies, representing more than 95 percent of the market, lost a combined 52,000 subscribers from contract-based plans in the January to March period, according to a tally by the Associated Press. The companies have a combined 220 million devices on such plans, accounting for about two-thirds of the total number of devices.


Given the huge number of people who are still enrolled in contracts that loss isn't as significant as it might seem from the outside. There wasn't a blockbuster new phone release last quarter to drive up the number of new customers. We got a new iPhone last fall and as AllThingsD reports, quarters following the release of a new iPhone tend to be very sluggish for new contracts. Experts expect that by the end of the year, carriers should be chalking up gains.

Then there's the issue of prepaid plans. Sure, the carriers are offering more options than ever, and the industry managed to add two million new prepaid customers last quarter. That's a big number, but not compared to last year's five million user bump during the same period of time. The report suggest people may be opting for cheaper prepaid as they can. But as long as unlocked versions most popular phones cost a fortune—contracts are here to stay. [AP via AllThingsD]


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