AirTouch cuts price of prepaid plans
Posted at 11:49 p.m. PDT Wednesday, April 21, 1999
BY JON HEALEY
Mercury News Staff Writer
San Francisco-based AirTouch Cellular is cutting the price of its
prepaid mobile-phone plans, making them more attractive to
consumers unwilling or unable to sign up for conventional wireless
service.
The move by AirTouch, one of the nation's largest mobile-phone
companies, won't have a direct impact on the Bay Area because
the company doesn't offer service here. But it could put pressure on other national carriers who do
serve the Bay Area, such as Sprint and GTE, to drop their prices to stay competitive.
With prepaid service, consumers supply their own mobile phone and pay in advance for minutes of
''air-time'' that can be used to make or receive calls. Wireless industry officials say that the prepaid
plans were aimed originally at people with bad credit ratings or no credit -- often low-income
adults, immigrants and young consumers-- but companies are trying to broaden the appeal to more
types of casual users.
Users limit their use
The cost per minute tends to be much higher than in conventional plans, which charge users a
minimum monthly fee that escalates with use. With prepaid plans, however, users can set a firm limit
on how much they spend on their wireless phone -- something that conventional plans don't allow,
short of turning off the phone.
Under its new approach, AirTouch is cutting the cost of air-time minutes and giving consumers 90
days -- up from 60 -- to use them before they expire. The prices start at $30 and go up to $100,
with per-minute charges ranging from 50 cents for the $30 plan to 35 cents for the $100 plan.
That's a simpler and in many cases better deal than AirTouch offers today in Sacramento, where
users pay 69 cents a minute during peak hours and 49 cents off-peak.
AirTouch also is making it easier for users who let their service lapse to avoid paying another $35
activation fee, enabling them to buy prepaid cards at many convenience stores and other retail
outlets and then call a toll-free number to renew their service. One of the disadvantages of prepaid
service has been that consumers who do not buy more air-time shortly after their current package
expires have to pay another costly activation fee.
It's also better than what the Bay Area wireless carriers offer. The best deal is from Sprint, which
charges 69 cents a minute with no activation fee.
Conventional plans better
AirTouch's $100 cards also offer better per-minute rates than the Bay Area plans with the lowest
monthly fees. However, if a consumer is going to spend $30 or more per month on a wireless
phone, he or she could find a much better deal with a conventional plan than a prepaid one.
Prepaid callers also have to cover the cost of a phone -- new ones start around $50 and can
approach $200 for a digital model. AirTouch also imposes a $1.95 per minute charge for using the
phone outside of one's local area.
For consumer advocates in California, prepaid plans are a red flag.
Anna Montes, who monitors telecommunications for The Latino Issues Forum of San Francisco,
said prepaid wireless is a good idea, but she cautioned that companies may be taking advantage of
non-English speaking consumers unfamiliar with the importance of reading the fine print. ''We
know that they're not targeting sophisticated users. . . . We're going to pay close attention to that.''
Michael Shames, a consumer advocate with the Utility Consumer Action Network in San Diego,
said the extra costs of using a prepaid plan are ''a high premium to pay for protecting yourself
against unexpectedly high cellular bills.'' He added, ''It's essentially a tax for being poor, or being in
a situation where they can't get a credit card.''
©1999 Mercury Center. |
