Why is prepaid service cheaper? I never understood why plans cost more. You would thing it would be the opposite.
Some reasons:
prioritized traffic - if towers are congested, carrier customers get priority over prepaid customers
name brand recognition - most have heard of Verizon, T-Mobile, or AT&T, few have heard of Tell, Ting, or RedPocket
financing - you can get "free" upgrades from bigger carriers, whereas I pay cash w/ my prepaid service
features - most big carriers support roaming (sometimes international roaming), whereas those tend to be ala carte w/ prepaid
In short, you get a bit more hassle w/ prepaid, but you get a lot of savings. I pay <$10/month for my service (1GB data, unlimited text, 300 minutes call), and I could get unlimited everything for $25-30 (depending on prepaid carrier). I bought my phone for <$400, whereas cost is less of a concern for big carriers since they often offer financing issues. I hate monthly payments, so I prefer to buy devices in cash and keep my monthly service payments low.
Plus the bills are paid up front. No collections department, or write-offs. Plus you get to earn interest if the customer pre pays multiple months or a year in advance.
Because prepaid customers get lower priority on the tower. If I'm in even a moderately crowded area, my connection speeds go to shit and nothing loads.
Money up front vs people just not paying the bill at the end of the month.
Why is prepaid service cheaper? I never understood why plans cost more. You would thing it would be the opposite.
Some reasons:
In short, you get a bit more hassle w/ prepaid, but you get a lot of savings. I pay <$10/month for my service (1GB data, unlimited text, 300 minutes call), and I could get unlimited everything for $25-30 (depending on prepaid carrier). I bought my phone for <$400, whereas cost is less of a concern for big carriers since they often offer financing issues. I hate monthly payments, so I prefer to buy devices in cash and keep my monthly service payments low.
Plus the bills are paid up front. No collections department, or write-offs. Plus you get to earn interest if the customer pre pays multiple months or a year in advance.
Because prepaid customers get lower priority on the tower. If I'm in even a moderately crowded area, my connection speeds go to shit and nothing loads.
Money up front vs people just not paying the bill at the end of the month.