Subject: [NEXTEL-1] Don't Want to Sign a Contract? Prepaid Plans May Be for You

From: [email-masked]
Date: Thu, 12 Jun 2003 09:35:05 -0400

Dow Jones Business News

Don't Want to Sign a Contract? Prepaid Plans May Be for You
Thursday June 12, 8:00 am ET 
By Jennifer Saranow

Are you wary of commitment? Nearly every cellphone carrier offers a plan that
doesn't require a contract or even a monthly bill. Instead, the customer simply
buys a block of wireless minutes up front.
These "prepaid" plans most commonly are aimed at teenagers and adults with poor
credit histories. There are higher fees per minute, the phones aren't subsidized,
and they have fewer features than the models offered with standard plans. Plus,
prepaid minutes expire if they aren't used within a certain amount of time,
usually about 90 days. As a result, they don't make sense for most cellphone
users.

But for some consumers, prepaid may be the best way. In particular, these plans
may appeal to infrequent cellphone users, travelers heading to a particular city
for a short period or people wary of making a commitment.

For cellphone companies, however, "it's basically a method of last resort," says
Roger Entner, a wireless analyst with Yankee Group, a research firm in Boston. In
general, "It's not profitable to cellphone carriers and it usually doesn't pay for
you unless you have very irregular income or usage patterns," he says.

Despite such concerns, the wireless industry sees promise in prepaid services.
Prepaid customers are one of the untapped segments of saturated cellphone market.
In addition, most carriers will let prepaid customers upgrade to more lucrative
standard plans with little hassle, although they may need to buy a new phone.
Yankee Group expects the number of prepaid customers to grow to 17.7% of total
cellphone users in 2005 from 11.1% in 2002.

Here's how prepaid plans typically work: Users sign up for a plan and buy a
startup kit that includes a phone, some minutes and a phone number. The minutes
are replenished by purchasing cards in varying cash denominations with PIN numbers
that are entered online or by phone. If the cards are lost, the customer usually
loses the minutes. To solve this problem, carriers allow customers with credit
cards to buy minutes online or by phone.
Here's a look at some major carriers' prepaid plans: Virgin Mobile

Virgin Mobile (www.virginmobileusa.com), a joint venture of Virgin Group and
Sprint PCS , aims its prepaid service at the 15-year-old to 24-year-old market.
Its latest advertising campaign kicked off during the MTV Movie awards last week
with commercials highlighting the benefits of a service without contracts or
monthly bills. At the end of April, Virgin Mobile says it had 500, 000
subscribers. (Sprint PCS doesn't offer Virgin plans at its stores.)

The Plan: Customers can purchase phones and prepaid cards, called Top-Up cards,
via the Web, by phone or at retailers including Best Buy, 7-Eleven and Virgin
Megastores. Cards come in denominations of $10, $20, $30 or $50, with users paying
25 cents a minute for the first 10 minutes of each day and then 10 cents a minute
for the remainder of the day.

Phones: Virgin Mobile offers three phones, each with voice mail, caller ID, long
distance, call waiting, text messaging, and directory assistance as well as
"VirginXtras," such as MTV Networks content. The phones range from $59 to $109,
with prices based on physical features. The most expensive, the Audiovox CDM-
8500, is a flip phone. Phones have slangy names such as "supermodel" and "party
animal." None has video or advanced graphics yet.

Penalties: Prepaid cards expire after 90 days, and users have to spend at least
$20 every 90 days or lose their number.

Cingular Wireless

Cingular's KIC Prepaid Plans are aimed at the youth market. KIC stands for " Keep
in Contact." Cingular (www.cingular.com), a joint venture between SBC
Communications Inc. (NYSE:SBC - News) and BellSouth Corp. (NYSE:BLS - News) ,
declined to release subscription numbers.

The plan: Customers can purchase phones at Cingular stores and prepaid cards in
denominations of $10, $20, $30, $50 and $100 at stores such as 7-Eleven and Quick
Stop. Regardless of the card denomination, users pay 35 cents a minute during
weekdays and 10 cents a minute on nights and weekends. Minutes can also be
replenished online or over the phone. Text messaging costs two cents to 10 cents
per message.

Phones: KIC service can be purchased with any handset, but Cingular offers four
special packages that depend on a customer's location. The plans come with a phone
and $30 of airtime. The phones include the Motorola 120T at $99.99, the Nokia 3360
at $129.99, the Motorola C331 at $129.99 and the Nokia 3560 at $ 199.99. The
phones offer various features depending on price, such as how many addresses you
can store, standby time and level of storage. None of the phones has Internet
access.

Penalties: The $10 card expires in 30 days, the rest in 90 days. For prepaid
service on a nonpackage phone, you have to pay $44.99 for a KIC starter kit that
comes with $30 of call time.

AT&T Wireless Services

AT&T Wireless Services Inc.'s traditional prepaid plan called Free2Go (
www.attws.com/personal/prepaid/) has been offered since September 1999. AT&T says
a very small percentage of its total base prepays. These plans shouldn't be
confused with AT&T Wireless's heavily promoted hybrid plan called GoPhone.
GoPhone, introduced in May, has no contract, but customers agree to be billed
directly to their credit cards or checking accounts each month. Both plans are
geared at people not interested in long-term contracts or with credit problems.
The Plan: Phones and cards can be bought at AT&T Wireless stores, retailers such
as 7-Eleven and Best Buy, via phone or online. Cards come in denominations of $10,
$25, $50, $75 or $100. The price per minute varies, depending on the amount of the
card and whether the customer chooses a local or national plan. For example, calls
with a $10 local plan cost 50 cents per minute locally, but if you live the area,
there's an 85 cent roaming charge. With the $100 local plan card, calls cost 12
cents a minute locally and 85 cents a minute for roaming. With the $100 national
plan, all calls cost 22 cents a minute. There is no charge for text messages
received, but to send them costs $10 cents per message.

Phones: Free2Go is only offered on one phone, the Nokia 3361. It lets users
receive and make calls, send and receive text messages and download ringtones and
graphics. But the $99.99 device runs on the carrier's older technology, so it
can't handle games or Internet access.

Penalties: Beyond the older phone and complicated pay structure, prepaid cards
expire in 45 days.

Verizon Wireless

Verizon Wireless, a joint venture between Verizon Communications and Vodafone
Group PLC , introduced its prepaid FreeUp plan (www.freeup.com) in August 2001 and
markets it to youth ages 16 to 24 on television channels such as WB and MTV and at
popular spring-break destinations. Currently, it's about 18% of new Verizon's
customer base and about 10% of overall subscribers.

The Plan: FreeUp phones can be purchased at Verizon Wireless stores or dealers and
RadioShack stores. Replenishment cards are available at Radio Shack, 7- Eleven,
and Western Union or online, by phone and in some markets by selected ATMs. Cards
come in denominations of $15, $30, $75 and $150, and users pay 30 cents for calls
on weekdays and 15 cents during nights and weekends. Text messages are five cents
to send and receive.
Phone: FreeUp can be purchased with any handset, but Verizon offers four phones in
special packages that come with the phone and $30 of airtime. The phones range in
price from $79.99 for the Motorola v120 to $199.99 for the LG VX4400. All include
text messaging and the capacity to download games and ringtones. None of the
phones has Internet access.

Penalties: It costs an additional $20 to be a prepay customer with a nonpackage
phone. Prepaid amounts expire at various times depending on the card purchased.
The $15 card expires in 30 days, the $30 and $75 cards in 60 days and the $75 and
$150 cards last 90 days. Amounts above $150 expire in 120 days.

Nextel Communications

Nextel Communications Inc. (NasdaqNM:NXTL - News) offers prepaid only in
California and Nevada under Boost Mobile, a joint venture of Nextel Communications
with Pipeline Holdings LLC of Australia. Boost Mobile service
(www.boostmobile.com) is aimed at customers ages 14 to 26.
The Plan: Phones and refill cards are available at retailers such as Best Buy and
online. Cards come in denominations of $20, $30 and $50. Calls cost 25 cents per
minute, wireless Web use costs 20 cents per day and text messaging costs 20 cents
per day.

Phones: Phones range from $79 to $269 and come with services including games,
ringtones, wireless Web access and e-mail and voicemail. The phones vary in size
and appearance. The $269 Boost i95cl, for instance, features a full-color screen.
All the phones also have "Boost 2Way," a digital long range walkie- talkie feature
that costs $1 per day of unlimited use.

Penalties: The phones work in only a dozen states and cities beyond California and
Nevada. Prepaid amounts expire in 90 days.

T-Mobile

The prepaid plan for T-Mobile (www.tmobile.com) offers a prepaid plan called
EasySpeak Prepaid.
The Plan: Prepaid cards are available at T-Mobile stores and convenience stores
and grocery stores such as 7-Eleven. Cards can be purchased in denominations of
$10, $25, $50 and $100. For $10, you get 30 minutes. For $25, you get 50 minutes.
For $50, you get 250 minutes. For $100, you get 665 minutes. Additional time can
only be bought using cards.

Phone: Only one phone is offered, a $99.99 Nokia 3390 phone that comes with AOL
Instant Messenger. There is no Internet access.

Penalties: Prepaid cards expire at different times depending on their
denomination. Ten dollar cards expire in 15 days, $25 in 30 days, $50 in 60 days
and $100 in 90 days. There is little evidence of this plan on T-Mobile's Web site.

TracFone

TracFone Wireless Inc., an affiliate of America Movil , has offered prepaid
service in the U.S. since 1996. It's aimed at credit challenged senior citizens,
for parents to buy for their children and people trying to control their costs.
(There also is a hybrid plan offered where fees are deducted monthly from checking
accounts, in which card minute-denominations are doubled.)

The Plan: Phones and prepaid cards are available in retail outlets such as Kmart,
Safeway, 7-Eleven and online at www.tracfone.com. Cards come in denominations of
30 minutes, 60 minutes, 150 minutes and 300 minutes, for $ 17.99, $24.99, $39.99
and $74.99, respectively. TracFone also offers a year card of 150 minutes for
$94.99.
Phones: TracFone offers phones in the Nokia 5100 series, for $59.99, and Motorola
120 series, for $79.99. All phones come with ten minutes of starter time, voice
mail and call waiting, but the Motorola also has voice dialing.

Penalties: Minutes expire in 60 days, but carry over if you replenish at least 30
minutes in that period. (The year card, which expires after one year, is an
exception.)
Write to Jennifer Saranow at [email-masked]

http://biz.yahoo.com/djus/030612/0800000609_1.html
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