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Hot Trend: Prepaid Phones

On Thursday, Sprint Nextel announced plans to sell pay-as-you-go phones in Walmart. Is this a game changer?

Throughout history --- from the automobile to the PC to the Snuggie -- once a breakthrough becomes main stream -- the competition to dominate the field becomes a fight to the death where only the strong and smart survive.

And that couldn’t be more true in the wireless industry; it seems nearly everyone in this country has a cellphone.

Just take a look at the stats:
- U.S. Population 309 Million
- U.S. Wireless Subscribers 285 Million

But don’t go writing off the wireless carriers just yet. Even if the wireless growth story is officially dead there may be a second life for cellular prepaid.

While just 1 in 5 US cell phone users use prepaid plans, pay as you go is already the norm in Europe and emerging markets.

Boosted by immigration and smartphone users fed up by draconian long-term deals and future for this segment is looking up.

Case in point: Verizon added 1.1 million prepaid users in the first quarter alone.

So who wins as wireless goes the way of Walmart?

These developments concern me, says Karen Finerman. It suggests pricing pressure lies ahead.

Also, it makes me question companies such as Verizon that have a lot of landline business, adds Gary Kaminksy. This kind of trend can’t be good for them.

I don’t like what Sprint did, says Brian Kelly. I see it as a backwards step for Sprint. But I’m a buyer of Letter S around 3.5 but as a play on 4G wireless.



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