After it's latest financials showed prepaid cell phones saved its corporate bacon, the company announced major upgrades in its non-contract mobile phone business. It launched a new division to complement its Virgin brand and slashed prices for its top-off cards. The key item to read in that price cut is that Virgin now offers unlimited Web access, e-mail and text for as little as $25 per month.
Prepaid phones? Like those cheapies that TV mobsters buy at the newstand to signal a hit?
Actually, Sprint and T-Mobile offer Blackberries with no-contract, pre-paid plans. AT&T has a $55 3G phone from LG. And all have souped-up feature phones that will access the Web for about a half-cent a minute.
If the prepaid boom sparks a cell phone price war, as predicted, this could dramatically speed up the adoption of Web-enabled phones in the United States. A recent Nielsen report confirmed my own research that a significant number of people are driven away from high-tech phones by the prospect of a 2-year contract. They either have poor credit or simply don't like the hassle.
The news media cannot survive only on the well-salaried, college-educated demographic that so far has flocked to iPhones, Blackberries and Droids. But if a timeclock-puncher can choose to pay for Web service just a few times a month to access a newspaper's food section or just turn on the data plan during the World Series, we have an foot in the door to their information world.
Consider the possibilities: Offer top-up data minutes in circulation contests. Slap a logo decal on a pre-paid phone and giving it away with a print subscription. Post a daily, quick download news summary that costs the user just a couple of cents.
Prepaid is the norm almost everywhere in the world except the U.S. Here it may come from the same customer revolt that drove newspaper subscribers to digital alternatives. Much like newspapers, the phone companies offered take-it-or-leave-it pricing and service. And like the Web for newspapers, the prepaid boom is making that last option much easier. Maybe this time we will be the ones positioned to catch the fallout.