The US Discovers Prepaid

Here's a link to an interesting post in the New York times on the growing use of prepaid SIM cards in the US. Living (at least partly) in Germany, where prepaid SIMs are the norm rather than the exception and where they've had a big impact on pricing in the past couple of years, it's interesting to see how radically different the perception of prepaid still is in the US:

  • Hardly known
  • The article suggests most know them from gangsters in TV shows to avoid being wiretapped. Should they do this in practice, they are in for quite a surprise, one of those TV myths 🙂
  • Perceived as expensive, when you compare it to some countries in Europe. I can't remember when I last paid the equivalent of $50 a month for voice calls. At 9 cents a minute, or 4 cents in Austria, that's difficult to do.
  • But in the US, $50 a month seems to be cheap and the article states more people are turning to it to reduce their monthly costs.

So it looks like the old ways of doing wireless in the US are slowly changing. Good news, also for me personally, and I already put it to good use last year when I was in the US for a week with an AT&T prepaid SIM card for Internet access via my phone. There are rumors the option I used at the time has been discontinued since, but should that be true, maybe one of the other emerging prepaid offers has something similar for me next time I visit the US.

Now it would be nice if coverage was improved and charges for inbound calls to be abolished, in my eyes one of the main inhibitors of using prepaid with accurate per call billing instead of a monthly minutes bundle applied for both incoming and outgoing calls.

Maybe an upcoming business opportunity for retailers to sell SIM cards and phones separately via the web or otherwise?

6 thoughts on “The US Discovers Prepaid”

  1. I am an American living in Ireland and I still don’t understand the major differences – American’s still learning about the pay as you go option. Mobile carriers in the past have made it hard to use pre-pay when they can make more using monthly plans.

  2. I used to have prepaid 2G service when I was a student in the US, but I remember it was limited to certain models–usually the cheapest Motorola handset.

    It is the same here in Japan though. There is a limited prepaid service offered by the KDDI au and Softbank, the smaller 3G providers, but it is available only for certain handsets (the ones with no features). Luckily the unlimited plans are getting cheaper due to competition.

  3. From what I know (engineer in a company that provides real-time charging software), we haven’t encountered patent problems other than in the US.

    Although, we aren’t in Japan, we are in Europe, South East Asia, the Middle East and Australasia.

    I think it just took off fast enough that everyone realised there was more money to be made by just building it instead of arguing over who invented it first.

  4. Hi Jason,

    thanks again for the comment! Would be interesting what the “undisclosed royalty fees” mentioned that US operators pay is in percentage or dollar wise per subscriber.


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