In many markets, including the United States of America, wireless carriers differentiate between prepay and postpay customers in a number of ways. Prepay customers – those who pay for their wireless plans up front – are often considered the lesser kind of customer. There are a few reasons for this: some customers would not pass the credit referencing and checks put in place by the carriers, which is the typical consumer opinion. However from the perspective of the carrier, prepay tariffs typically earn noticeably less than postpay tariffs from an average revenue perspective. This can be down to a number of reasons such as prepay customers have a smaller budget for their wireless plans or because prepay customers are more price sensitive than postpay customers. The more price sensitive the customer, the more likely he or she is to move on in search of a better deal and during the early months, a carrier typically does not earn much from a customer. We have covered Verizon Wireless' decision to largely ignore prepaid customers and instead concentrate on the more valuable postpay customers, which ties in with customers happy with Verizon's network and customer services. In the recent earnings statement, Verizon announced prepay customer losses but considered these an acceptable casualty given their focus on the greater quality customers: that is, those prepared to pay more for their service. One reason why Verizon's prepay service was not competitive is to ensure that customers signed up to equipment installation plans don't migrate to prepay service plans – which is happening more and more as prepay and postpay plans become more and more similar.
However, Verizon Wireless have today announced an improvement to how competitive their prepay services are with a permanent change that includes more data. The deals start on Sunday and customers will also benefit from unlimited calling to both Mexico and Canada on the most expensive plan. In the detail, the $60 sees the amount of data doubling to 6 GB a month, which includes a bonus 1 GB through the AutoPay Bonus. This gives unlimited talk and text messages to the United States, Mexico and Canada. The next plan down costs $45 a month and includes 3 GB of data (1 GB of this is the AutoPay Bonus), where formerly this plan only included 1 GB of data. Customers can add another 1 GB of data for $10 a month. Finally, the unlimited talk, text and Wi-Fi plan costs $30 a month. The $30 plan may also be used for basic handsets, plus a 300 plan at $15 (this includes any combination of 300 minutes, texts or multimedia messages and unlimited mobile web for $15 a month). These tariffs were previously offered as a special deal back in February and pull Verizon's prepay services closer aligned with the competition.
Verizon Wireless' U-turn over prepay services appears to be an attempt to stem the flow of customers leaving the service. During the first quarter 2016, Verizon lost 177,000 prepaid customers (compared with a loss of 188,000 customers for the first quarter 2015). Perhaps after their announcement of using TracFone as a proxy for their prepay service, or seeing how T-Mobile USA and AT&T are making money from their prepay customers, Verizon has changed its mind?