The Prepaid Cell Phone

Most mobile phone users pay for most of their usage on a subscription plan. It’s simple: stay within the plan limits, and you pay the same amount every month. But there is a simpler approach to cell phone use that is becoming more popular now. That’s the prepaid cell phone, which lets you pay in advance for a fixed number of minutes.

Prepaid cell phones have been around for more than a decade, but are becoming popular this year as more people look for ways to cut back on living expenses. According to a recent Nielsen survey, switching to a prepaid plan is the third most important reason for people to change cellular carriers. If you are reasonably organized and can limit your cell phone use to about an hour a week, you pay noticeably less with a prepaid plan. Even better, you can let your service lapse any time you want to with no paperwork and no penalties. (This isn’t quite as good as it sounds. If you want to keep the same phone number, you’ll probably end up buying more minutes almost every month.)

There has been a pretty strong trend in the last 20 years to turn all communication services into subscriptions. Cable television set the tone for this — it was $7.99 a month whether you watched the television or not (over time, of course, the monthly charge went up, and up, and up). But why should communications have to be priced as a subscription?

It is easier than ever to keep track of usage, so we may see more prepaid and pay-as-you-go plans, not just in cell phones, but in other communication services.

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