AT&T (T) To Explore Prepaid Telephony
November 25, 2009 11:24 AM
AT&T (NYSE: T) has joined the ranks of mobile-telephone companies dealing with prepaid plans. Historically, all major wireless telephone firms preferred contract subscriptions over pay-as-you-go plans. Prepaid wireless market has been a niche for smaller players such as Leap Wireless (NASDAQ: LEAP).
Although AT&T is not looking to replace its contract plans with prepaid ones. However, with prepaid plans, AT&T expects to capture the market which stays away from expensive contract plans. The firm is looking to segment the market, offering contract plans to business and regular users whereas marketing the prepaid plans to intermittent users. Verizon (NYSE: VZ) is also expected to jump in the Prepaid Telephone arena.
It is yet to be seen whether these firms would be able to counter the aggressive pricing of niche market players such as Virgin and Leap. Virgin is owned by Sprint(NYSE: S) and it charges $60 for 1 GB data. However, both AT&T and Verizon have nation-wide network which is a major advantage.
