Charles Hudson's Weblog

After spending an extended holiday in Europe, I was amazed by the convenience and quality of Vodafone’s pre-paid mobile service. I have virtually no experience with pre-paid mobile in the United States, but there are a few elements of the European experience that make it incredibly enjoyable for the traveler.

Getting started with Vodafone pre-paid was incredibly inexpensive and easy. I purchased a Siemens C55 handset and a SIM card for just about US$100 (the SIM card included some airtime). There were several things that stood out about my 8 week experience with Vodafone pre-paid.

Pre-Paid Does Not Equal Bad Credit – The use of pre-paid mobile was not confined to those whose credit would not allow them to qualify for a traditional contract. Many of those who I spoke to about the pre-paid vs. contract decision mentioned that they enjoyed the flexibility of not being locked into a particular carrier and the ability to tightly control their mobile expenditures.

Ubiquitous Top Up Infrastructure – I was able to add money to my phone at gas stations, tobacco shops, grocery stores, and just about any other retail outlet. Had I gone through the process of registering my bank account or credit card, I would have been able to add credit to my phone from any ATM or directly over the network. I never found myself in a situation where I had to travel more than 10-15 minutes to find a place that offered me some way in which to recharge my phone.

Reasonable Rate Plans – With the exception of calls to the United States during peak hours, I didn’t find the pre-paid rates to be exorbitant. My cursory comparison of pre-paid vs. contract airtime charges did not reveal an extreme pricing difference between the two.

Free Incoming Calls – Perhaps the most interesting (and compelling) element of pre-paid wireless in Europe is that all incoming calls are free. So, if you tend to be on the receiving end of most phone calls, you can go quite a long time on a fairly minimal number of pre-paid minutes.

Will Pre-Paid Work in the United States?

The fact that AT&T Wireless, Verizon, and Sprint PCS/Virgin Mobile are now offering pre-paid wireless services, the obvious question is whether the programs will be successful in the United States. There are three main questions that need to be answered:

Credit Perception – In Europe, I met many people who were far from credit-unworthy but preferred to stay with pre-paid options in lieu of contracts. In the United States, however, I believe that there is a tendency to associate pre-paid telephony with the credit unworthy. If this perception persists, the market will continue to be constrained to the truly credit unworthy and the lower half of the so-called youth market.

Recharge Infrastructure – I am curious to see how US operators will build a recharge infrastructure. The Virgin Mobile website talks about how consumers will be able to top up with cards or credit cards. Here is where I see potential for a disconnect. If a customer does not have the means to get a contract-based mobile phone plan, will he/she have access to a credit card? Will the 13-18 year olds who are part of this target audience have access to a credit card (their own or one from their parents)? The ubiquity of European recharge outlets really helps.

Pricing Plans (Low Cost vs. Pre-Paid) – Finally, the United States offers very competitive pricing on airtime these days, with an explosion of plans that cost less than $40 per month and offer several hundred minutes of talk time. Will parents, who have a vested financial interest in keeping their teenage children’s mobile bills within reason, opt for pre-paid plans or just more generous minute allotments with fixed price plans?

I am eager to see how all of these various pre-paid options pan out. Anyone who has direct experience with one of these services in the US should let me know what they think.