Edgar Cervantes / Android Authority
Most countries rely heavily on prepaid services as opposed to postpaid services, but the United States has long been an exception. That balance is slowly changing in the US as prepaid adoption is rising while postpaid growth has stalled or even slipped in some cases. The main driver is customer frustration with steady price escalations, including fee hikes, smaller autopay discounts, and direct plan increases. For example, Verizon recently cut its myPlan autopay discount from ten dollars to five dollars, and all three major carriers have raised their infrastructure fees. T-Mobile also stopped including taxes and fees in its advertised pricing.
I have argued before that prepaid is now the better choice for many consumers. The real questions are what caused this shift, whether it could have been avoided, and how worried the big three should be about prepaid competitors.
Should the big 3 worry about the rise of prepaid?
22 votes
Yes, postpaid’s days on top are numbered.
41%
No, they have prepaid brands of their own so it won’t matter.
45%
No, postpaid will still be a big player for a long time.
9%
Other (Let us know in coments).
5%
What’s really behind postpaid price hikes?
Joe Maring / Android Authority
Price increases have become more common over the last few years, but several factors are at play, with inflation at the top of the list. As much as we complain about how expensive plans have become, we often forget that the value of a dollar does not stay constant.
Back in 2018, a single-line Verizon Mix and Match plan was priced at around $75 to $95 a month. When adjusted for inflation, that is about $97 to $123 today. In contrast, Verizon now charges $65 to $90 a month. Even T-Mobile’s cheapest plans started at $25 a month in 2020 for four lines, which would be around $31 today. T-Mobile still offers a basic four-line package for $25 per line.
Inflation and rising costs have certainly been one factor in price increases and value decline.
On paper, pricing does not look dramatically different. However, the cracks start to show once you look closer. Hidden costs, such as ever-increasing telco recovery fees, are not reflected in the advertised price. It is also worth noting that T-Mobile used to include taxes and fees, which would likely save you at least $10 to $15 a month.
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When you account for all these factors, pricing has crept up across the board, although the amount varies depending on the carrier. Verizon was always expensive, and its pricing has remained more consistent. T-Mobile, on the other hand, has seen much larger hikes.
The real issue is not the advertised pricing in 2025. It is that the perceived value is not as high as it once was, and for good reason. With extremely high housing and food costs, many of us are much more careful with our spending than we were five or six years ago. The big three carriers have removed perks, changed or watered down price guarantees, gutted in-store customer experience, and placed too much pressure on their reps. All of this has eroded the overall experience without offering any new benefits, such as lower pricing, in return.
The evolution of prepaid has only served to erode this value further
Edgar Cervantes / Android Authority
The prepaid market in the US was once extremely limited. Plans were basic, often with little or no data. Even if you found a prepaid plan similar to postpaid, the pricing was not always better, and oftentimes it would cost you more for less service. Prepaid was mostly aimed at teens and people with poor credit, which meant you either got terrible service for cheap or decent service at a price that was not significantly better than postpaid.
Today, prepaid services can match or even exceed postpaid offerings in some areas. Google Fi has better international roaming options than any of the big three. Verizon-owned Visible offers some of the cheapest rates available, with network quality and features that come very close to Verizon postpaid, although customer service still lags.
As the value of postpaid has shrunk, the value of prepaid has risen to match it in many ways. The gap between the two is now smaller than ever, which naturally makes more people question the value of plans we have arguably always overpaid for.
Could the big carriers have prevented this value loss to begin with?
Joe Maring / Android Authority
This is a difficult question. There are legitimate reasons why the big three carriers have felt the need to cut internal costs by increasing prices, reducing staff, and taking other measures that lower perceived value. A few major factors include the following:
- Spectrum is insanely expensive. The C-band auction in the US alone hit over $80 billion in bids across carriers. That is a huge capital hit that has to be paid down over the years.
- Financing, labor, and energy costs have increased. Not only have interest rates climbed higher for the carriers, but they’ve also seen increased labor and energy costs in the process.
- A 5G build-out is not cheap. While LTE was far from cheap, the 5G build-out has been progressively expensive for carriers with requirements around fiber backhaul, the new for new radios, zoning fights, and other factors all costing them money in the process. Carriers also have to keep LTE running in parallel while building 5G. In short, running the network costs a lot more than it did a decade or two ago.
These factors have created higher debt and higher operating expenses. That increases pressure from shareholders, who push carriers to extract as much revenue as possible from customers.
However, none of these challenges required carriers to reduce value or raise prices through indirect and customer-unfriendly methods. They could have accepted lower margins for a few years and kept base plan pricing stable, then made up the difference through upsells and add-ons. They could have slowed the pace of paying down spectrum and 5G costs instead of trying to recoup everything quickly by squeezing customers.
Likewise, staffing changes could have been made more carefully and gradually instead of cutting large portions of the workforce at once, as Verizon recently did. But such decisions would have upset Wall Street.
In reality, the carriers behaved the same way most large corporations do. They prioritized what was best for shareholders rather than what was best for customers.
Why hasn’t prepaid seen the same level of increases?
You might be wondering why prepaid would be any different here. After all, inflation and the costs of labor would affect prepaid, too, right? Yes, but the circumstances are a bit different here. First, prepaid carriers don’t have to worry about the labor involved in running a network or the investments required to purchase spectrum.
In fact, prepaid carriers have positively benefited from today’s more expensive networks. Modern networks are faster, more reliable, and have way more extra bandwidth left over than the big networks did a decade ago. There’s also more competition in the prepaid world, which has led the big three to become more competitive with their rates in order to attract potential partners away from bigger rivals. All of this means that prepaid carriers today have more bandwidth to work with for less than they once paid.
Additionally, prepaid carriers have always scaled back to save money by offering less robust customer service systems, fewer or even no retail stores, and other moves designed to cut costs. The difference is that the postpaid world is only now making these same moves, largely due to the expenses required to run a full-scale network in today’s age. The end result is that prepaid’s pricing has stayed relatively flat while postpaid has crept up sharply.
Prepaid may be a long-term threat to postpaid, but it’s not a threat to the big three
Joe Maring / Android Authority
Prepaid is gaining popularity among everyday consumers, and that trend may accelerate. However, it is unlikely to significantly harm the big three anytime soon. Verizon is the biggest question mark, but it will probably recover over time.
All three major carriers are also focusing heavily on home internet, whether 5G-based or fiber, which has seen significant growth on all fronts. Likewise, it’s important to remember the big three also offer prepaid services directly. Postpaid might not be jumping as rapidly as it once was, but prepaid is actually rising. T-Mobile added 43,000 prepaid subscribers in Q3, while Verizon reports 47,000 new prepaid subscribers, which outpaces its postpaid loss over the same period.
Postpaid is not dying, but its absolute dominance in the market is finally waning.
The big carriers also continue to acquire or operate many of the top prepaid brands. Verizon controls Visible, Total, Straight Talk, and several others. T-Mobile owns Mint, Metro, and more. AT&T is behind in this area, with Cricket as its main sub-brand, but it recently began efforts to attract more prepaid partners by offering these companies aggressive rates and simplified tools for creating a prepaid brand.
Even if magically prepaid and postpaid phone subscriptions fell off the roof in a big way, all three still own their individual networks, which gives them some very real leverage. Working with prepaid and MVNO partners helps the carriers use unused spectrum while outsourcing customer management, retention, and other overhead. This lets them shift more focus to growing sectors such as home internet, enterprise solutions, emergency response systems, and other services.
Bottom line, prepaid is on the rise, but the fall of postpaid has been a bit exaggerated. Legacy customers, big families, and other revenue sources continue to be major profit drivers, and even if that changes, the big three are working hard to ensure their other offerings provide a fallback that’s unlikely to vanish anytime in the near future. So no, the big three shouldn’t be worried, but that doesn’t mean these companies can continue in the same direction long-term if things are to stay that way.
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