PREPAID IN FULL

For years, prepaid was the redheaded stepchild of wireless. Now U.S. carriers are making it a priority: Cingular Wireless announced plans to promote its new Go prepaid service to cost-conscious demographics like teen-agers and seniors, following on the heels of Nextel's youth-targeted Boost Mobile prepaid subsidiary notching its first-ever operating profit in Q1 2005. Although the economics of prepaid have not changed — without contracts, high churn remains endemic, and revenues still pale in comparison to postpaid — carriers are losing more and more of their customers to prepaid mobile virtual network operator services. Prepaid still accounts for only a small portion of the U.S. wireless market, but MVNOs like Boost and Virgin Mobile USA have captured the imagination of the youth market via unique applications (all Boost handsets are push-to-talk-enabled), content partnerships (like Virgin's affiliation with MTV) and plans that cater to those unwilling or unable to fork over $50 per month. The catch is that when you crunch the numbers, prepaid is by no means inexpensive — on a per-minute basis, prepaid airtime is typically much pricier than its contract counterpart. That's the point carriers need to drive home — with some perks (e.g. free in-network calls), cool handsets and creativity, they can lure some of the MVNO refugees back into the fold. Consumers may want their MTV, but they want a sweet deal even more.