a new pricing mechanism within its prepaid plans that gives consumers discounts based on the duration they remain on a Verizon plan. The first discount of $5 kicks in after three months, while the second discount of $10 activates after nine months. This comes just a few weeks after AT&T
pricing options for its prepaid service, in which subscribers receive a lower monthly rate by prepaying for either three months or a full year of service. These pricing features will help AT&T and Verizon attract prepaid subscribers who can become profitable long-term customers. Relative to postpaid plans, prepaid plans to attract more price-sensitive, less loyal customers.
This makes it hard for carriers to ever raise prices without also losing customers, making this a low-margin strategy. However, the new pricing features offered by AT&T and Verizon create further segmentation within the postpaid customer base, allowing the network operators to attract subscribers who are willing to give up flexibility in exchange for lower prices.
Because of the economic downturn, wireless carriers must make price concessions to sustain the overall health of their businesses. Prior to the pandemic, US wireless carriers had been attempting to convert prepaid customers to postpaid plans. Prepaid connections made up only 4% of overall wireless retail connections for
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