Verizon and partner Walmart introduced a prepaid home internet service powered by subsidiary Tracfone’s Straight Talk brand. The service looks to create a lower cost market with reduced barriers to entry such as credit checks, however the limitations in service emphasize the difficulty providers have in providing enough value for the cost of a prepaid service versus a standard service. Mitchell Clark reports on the developments in The Verge:
“The $45 per month service uses Verizon’s 5G and 4G networks and a router, available at ‘nearly 2,000 Walmart stores across the country,’ according to a press release, to provide home internet without having to have a company come and hook up a modem. But while the company pitches it as an affordable option, there are definitely some considerations you’ll want to take into account if you’re looking to get cellular internet as cheaply as possible.”
As Clark points out, the price is only $5 to $15 less expensive per month versus Verizon’s flagship 5G Home service and is more expensive per month that the same service if bundled with several of Verizon’s mobile phone packages. In addition, the prepaid program requires an initial purchase of a $99 router that appears to have speed limitations as compared to the 5G Home service, a negative differentiator as compared to Metro by T-Mobile’s recent home internet service launch that offers similar speeds to T-Mobiles standard service.
Benefits of Prepaid Home Internet
Despite the negatives that emphasize the limitations of the service as compared to price the introduction of prepaid internet represents an overall positive to the industry. Clark points out the two greatest benefits of prepaid service that opens up easier access to connectivity for underserved constituencies:
“I do want to make it clear that I think it’s a good thing that it exists and that Verizon is making 5G home internet available to people who can’t pass a credit check or who need the ability to pay their bill in cash.”
Closing the Digital Divide
The simple availability of a prepaid service from both Verizon and T-Mobile creates new opportunity to close the digital divide. The long-term hope is that costs of both the monthly service and equipment drop as wireless internet services reach critical mass.
Additionally, the ability to pair prepaid services with government services such as the Affordable Connectivity Program, that can discount services by $30 monthly, opens up broader opportunity while also helping to defray the initial costs of the hardware through lower monthly fees. The overall wireless space will be fascinating to watch as coverage and speeds increase, allowing more consumers to transition from wired to wireless home internet. I expect prepaid options to lag behind the overall service but to offer more availability and value in the long-term outlook.
Overview by Jordan Hirschfield, Director of the Prepaid Advisory Service at Mercator Advisory Group.
