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Verizon Pushes Value Message with $35 Prepaid Plan

Verizon Pushes Value Message with $35 Prepaid Plan
By Jennifer LeClaire

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"We are seeing a sea change in the way carriers charge and what customers pay for wireless service," said analyst Jeff Kagan of Verizon's prepaid move. "An increasing number of customers who are interested in cost savings -- but still want all of these smartphone features -- are moving toward this prepaid world."
 

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T-Mobile finally has the iPhone -- and an affordable, attractive unlimited talk, text and data plan to go with it. But Verizon Wireless isn't taking the move lying down.

Verizon Wireless on Thursday rolled out a new offering it hopes will attract some of T-Mobile's core market: the value-oriented customer. Straying from its premium mobile pricing model, the company is testing a new strategy with a $35 prepaid plan. That's the cheapest option you'll find on Verizon's menu.

Although it hardly compares to what T-Mobile is offering on the iPhone front, the new $35 plan may find its niche. The wireless carrier is going after feature phone users who text, text and text. Seemingly perfect for tweens and teens, the plan offers unlimited texting and unlimited web surfing. Only 500 calling minutes are included in the plan but there is no contract and free activation.

What's the Catch?

Of course, there's a catch (or catches).

The main catch is that you have a limited choice of feature phones to choose from. Verizon is only offering the $35 a month no-contract plan on four models: the LG Cosmos 2; the Samsung Gusto 2; the Samsung Intensity III; and the LG Extravert. The first two models sell for $49.99. The Samsung Intensity III sells for $59.99 and the Extravert goes for $69.99.

The other catch is that mobile-to-mobile calling isn't free like it typically is on most wireless plans. If you want mobile-to-mobile calling, you can opt for Verizon's $50 basic plan and get unlimited anytime minutes.

Jeff Kagan, an independent telecom analyst in Atlanta, told us the Verizon story itself isn't huge news but the industry move toward prepaid is. And that's what he sees when he pulls back the camera on this announcement.

Customers in Control

"This is a move toward reduced cost of customers. Over the last 10 or 15 years, wireless costs have been dictated by the carriers. For the first time, we're seeing the prices and choices of wireless become indicated by the customer. There are a variety of reasons," Kagan said.

He pointed to companies like TracPhone as one of those reasons. As customers try to cut costs, he said, TracPhone and similar wireless carriers mark a true competitive threat to the larger players. The bigger the competitive threat, the more carriers pay attention.

"We are seeing a sea change in the way carriers charge and what customers pay for wireless service. You still have plenty of customers who buy regular phones. But an increasing number of customers who are interested in cost savings -- but still want all of these smartphone features -- are moving toward this prepaid world," Kagan said. "The wireless industry is being reshaped. The coin is flipping. The carriers have always ruled and now the customers are ruling. The customers, if they are smart, have choices that can save them money."
 

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