A closer look at the pre-paying mobile consumer

Graeme BruceBusiness Data Journalist
May 26, 2021, 1:45 PM UTC

In the latter half of 2021, The Federal Communications Commision is expected to decide on Verizon’s $6.25 billion purchase of Tracfone, the nation’s biggest prepaid mobile brand. The acquisition is the latest in a series of moves that has consolidated the wireless industry in the United States. 

As the industry waits for the FCC’s ruling on whether to approve the purchase, continuously-collected YouGov data shows just how substantial the pre-paid cellular market is in the United States. 

Roughly a third of Americans have some type of pre-paid cellular plan (36%), either one where they pay prior to using allowances and making calls, or where they pay for minutes, texts, data or a number of days and refill as needed. 

These pre-pay consumers are more likely to be younger - under the age of 29 (38%) and make less than 75% of the median household income (50%). Generally, these customers are spread across urban and rural areas - and they are less likely to live in the suburbs. 

When it announced the acquisition of Tracfone in September 2020, Verizon said itexpects to bring its award-winning 4G LTE and 5G networks and other innovative technologies to Tracfone customers, further develop Tracfone’s distribution channels, and expand Tracfone’s market opportunities.” 

But more than any mobile feature—speed, camera quality or screen size – Americans currently pre-paying for their cellular service care about value for money (60%), even more than those who pay monthly (56%). Right now, a plurality of pre-paying consumers pays between $25 and $50 per month to their wireless carrier; however 17% pay upwards of $75, which is equal to some contract options. 

While we’re seeing consolidation among carriers, there are also fewer major players making hardware as well, as LG announced its exit from the smartphone market in April. This news tees up a dogfight between existing hardware manufacturers, especially in the pre-paid market. YouGov data shows pre-paying consumers are three times as likely to consider an LG device when they get their next phone. That potential market segment is now up for Samsung, Motorola and (to a lesser extent) Apple to grab. 

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Methodology: YouGov Profiles is based on continuously collected data and rolling surveys, rather than from a single limited questionnaire. Profiles data referenced is based on a sample size of 31,842 US adults. Online interviews were conducted between May 2020 – May 2021. Profiles data is nationally representative and weighted by age, gender, education, region, and race. Learn more about Profiles.

Image: Getty