In a sign that it is expanding its portfolio of prepaid devices and plans, the nation's leading mobile carrier will begin offering a no-contract smartphone tomorrow for $80 including unlimited talk, text and data . And it is also offering prepaid for a 4G LTE data hotspot.
The new plan is cheaper than the current prepaid plan for smartphones, which does not include unlimited talk and text. Those customers pay $64.99 up front for 450 minutes plus $30 for unlimited data. The average device cost of $199 is also higher than the Samsung Illusion announced today at $169.99.
The news comes shortly after Verizon released first-quarter figures showing that its 93 million customers now include 5 million prepaid connections, having risen sharply from a net loss of 27,000 in the first quarter of last year to a gain of 233,000 in the first quarter of 2012. Postpaid subscribers, meanwhile, fell by 44.7 percent.
"We have always had prepaid plans but they evolve because the kinds of people who use them evolve," Verizon spokeswoman Brenda Raney told us. She said that while in the past prepaid was only for value-conscious customers, today they are being used by people who operate cash businesses, by exchange students or by families that want to teach teenagers how to manage their monthly usage. (When prepaid limited voice plans run out the phone won't make calls until additional minutes are purchased for the interim until the next billing cycle.)
Verizon also has a $50 flat-fee prepaid plan for basic phones and in some areas, as a promotion, offers that rate for a limited number of smartphones.
The 3G, touchscreen Samsung Illusion is a modest offering compared with recent releases by the South Korean tech giant, now the leading handset supplier in the world. The Illusion has a 3.5-inch screen, currently running Android 2.3 (Gingerbread), with a 1-GHz processor and 3-megapixel single camera. It will debut initially at Verizon stores and soon at top retailers Best Buy, Target, RadioShack and Walmart.
Verizon is also offering prepaid data for its $129.99 Jetpack 4G LTE Mobile Hotspot MiFi 4510L to create a "Wi-Fi cloud " connecting up to five enabled devices, with three prepaid data plans: $15 for 250 MB per week, $60 for 3 GB of data monthly or $90 for 10 GB monthly."
'Where The Growth Is'
A prepaid smartphone seems an attempt to respond to smaller rivals that offer unlimited talk, text and data. MetroPCS offers a range of Android phones for $45 a month, but throttles data to lower speeds after 250 megabytes. An extra $10 adds 2.5 gigabytes before the yellow flag is waved.
"That's where the industry growth is, the prepaid segment, especially among smartphone users," analyst Ken Dulaney of Gartner told us. "The price points are higher vs. feature device owners."
AT&T this month set new rates for data but required pay-as-you-go data customers to have a monthly $25 or $50 voice plan, enabling them to pay or $25 for 1 GB, $15 for 200 megabytes or $5 for 50 megabytes.