The Rise of the Pre-Paid Wireless Industry
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The Rise of the Pre-Paid Wireless Industry
Defining the Telecom landscape
PURCHASE MODEL Mobile Network Operator (MNO)*
Post-paid Pre-paid A wireless service provider that owns and controls all the
elements needed (including radio spectrum) to sell and deliver
connectivity to an end user. In the US, there are four main
MNOs: AT&T, Verizon, T-Mobile, and Dish.
MNO
Mobile Virtual Network Operator (MVNO)
OPEARTOR MODEL
Lease wireless capacity from one of the MNOs in the US at
wholesale prices and resell it to consumers at reduced retail
prices under their own brands. There are over 1,000 MVNOs
internationally, which account for ~10% of total mobile users.
X
Pre-paid Wireless Plans
MVNO
Customers pay a flat fee upfront for service.
Post-paid Wireless Plans
Customer are billed at the end of every month based on their
usage.
*US Cellular is also technically an MNO, but is significantly smaller than
the Big 4 Carriers
2
The relationship between different network operators
There is a revenue-generating, symbiotic relationship between pre-paid and post-paid service providers
AT&T rents spectrum from the US government
Premium Spectrum Standard Spectrum
Sold in a POST-PAID contract Sold via a PRE-PAID monthly fee
Owned & Operated by AT&T Operated by lessees
MNO MVNO
1 2 3
MNOs lease spectrum from With the lower quality Or they lease it to virtual
US government. They charge spectrum, MNOs operate network operators who run
a premium to serve their own their own pre-paid wireless pre-paid services at a lower
customers with the highest businesses. cost to consumers.
quality spectrum.
3
Outside of the Big 4, the marketplace is fragmented
Pre-paids compete against each other for product and price differentiation
MNO*
(Post-paid)
MNO
(Pre-paid)
MVNO
(Pre-paid)
*US Cellular is also technically an MNO, but is significantly smaller than the Big 4 Carriers
4
Pre-paid is a lucrative and quickly growing industry
$55B 29% $1B
Market Valuation 2017 of Mobile Subscribers in US Global Ad Spend in 2019
$120B 71%
Mobile Communications
118%
Market Valuation by 2024 Market Value Growth by 2024
Occur over Wi-Fi
Source: MarketWatch, MediaRadar 2019 Spend Report, Mintel 2020 “Mobile Network Providers – US,” Cisco Visual Networking
Index: Global Mobile Data Traffic Forecast Update, 2016-2021
5Pre-paids have unique dynamics vs. post-paids
Network Footprint Point of Sale Hardware & Services
Mostly regional; MVNOs lease Bought online or in major retail Cheaper, outdated devices & pre-
spectrum from multiple MNOs outlets; few have their own stores paid, no-contract data plans
T H E P R E - PA I D C U S T O M E R
Dine out 6+ times
per week Pre-paid subscribers
134 Index skew lower income
61%
% Pre-paid Subscribers
50
Make purchases 39
pre-paid subscribers 40
onlineThese dynamics create unique business challenges
A Domineering Less Budget for
Weaker Brands
Oligopoly More Targeting
• The Big 4 wireless providers • Due to lack of awareness and • Pre-paids target a narrower
account for over 75% of all contracts, pre-paids struggle audience than their post-paid
wireless subscriptions. to cultivate loyalty. counterparts, and with less
budget.
• Huge market caps come with • Only 8.9% of consumers
powerful marketing budgets think pre-paids are high • They struggle to reach
that lead to nearly universal quality, compared to 21.7% prospective customers in a
brand awareness. for post-paids. precise yet economical way.
Source: Mintel “Mobile Network Providers – US” (2020), YouGov Brand Index – 2019
7How pre-paids & MVNOs have navigated those
challenges to date
Created Unique Highlighted
Relied on Local
Brand Identities Savings & Value
• Pre-paid advertisers have • Pre-paids heavily promote • Pre-paid advertisers,
carved out a distinct brand their low cost and good value. particularly MVNOs, often
identity. operate only in certain areas.
• They drive brand love and
• They typically emphasize loyalty by positioning • As a result, they tend to
simplicity, price, and value themselves as likeable, easy, allocate their ad spend
over any other attribute. and reliable alternatives to locally, focusing on key
pricier post-paid competitors. markets.
8Pre-paid Wireless Brands are increasing in ad spend…
Telecom Total Media Spend: 2019
$700
$600
Pre-paid Wireless ad spend totaled over a billion dollars
$500
$1B in 2019, comprising 31% of overall Wireless ad spend
Millions
$400
$300
$200
$100
$0
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Source: MediaRadar 2019 Spend Report (Print, Digital, + TV)
9But they are spending differently
MVNOs invested significantly more in local markets and print advertising
2019 Wireless Ad Spend 2019 Wireless Local TV Ad Spend
POST-PAID PRE-PAID
(MNO) (MNO+MVNO)
POST-PAID 1%
1% 6% (MNO)
10%
12%
$2.3B $1.0B
Total Total
82% PRE-PAID 30%
89% (MNO+MVNO)
Source: MediaRadar 2019 Wireless Spend Report, Nielsen Ad Intel
10Pre-paid marketers constantly seek creative ways
to differentiate their brands from the major carriers
G E O - TA R G E T I N G I N R E TA I L
Visible Xfinity Mobile Boost Mobile
App-only business turns to OOH Quantifying cost savings Empowers voters
S T R A I G H T
• Visible’s service runs entirely through an app • Turned YouTube pre-roll ads into price tags • Meaningfully broke through to its
(no store or salespeople) to prove it’s worth switching providers multicultural, millennial audience by
“boosting” their voice on Election Day
• To highlight its unconventional service, • Contextually relevant 6-second ads
T A L K
Visible used empty retail stores as a quantified the data cost of the video about to • Turned Boost Mobile stores into official
billboard play polling stations, making it easier for low-
W I R E L E S S
income workers to vote without worrying
• With limited budget, Visible leverage OOH • Audience-led strategy targeted viewers
about long lines or far away polls
and digital/social ads to focus on key based on their current service provider
markets
11 Click each image for more detailsNBCU offers solutions for pre-paid challenges
Owning High Strengthening Activating
Impact Positions The Brand Audiences
• NBCU owns a deep portfolio of • NBCU’s award winning branded • Leverage NBCU’s suite of data-
tentpoles, sponsorships, and content can tell our clients’ brand driven targeting products to reach
programs to increase awareness stories in creative & contextually any audience across all screens
and consideration for pre-paids. relevant ways to consumers. and platforms.
• Category exclusivity available to • Tap into NBCU’s wide range of • A properly constructed NBCU
develop true ownership positions commercial innovations to plan is proven to drive full funnel
against larger competitors. increase consideration & impact. results for Telecom brands.
• Amplify sponsorships via NBCU • Build brand equity beyond price • NBCU offers measurement
Talent/IP, branded content, social and promotional messaging. solutions that prove conversion
media, experiential, and more. lifts for Telecom brands.
12Telecommunications
C L I E N T S T R AT E G Y T E A M
Thank you!
Please reach out with
any questions or to
learn more about
Nick Youngman Cory Hinton
VP, Client Strategy Director, Client Strategy
NBCU’s pre-paid Nicholas.Youngman@nbcuni.com Cory.Hinton@nbcuni.com
wireless solutions
Olivia Zderic
Manager, Client Strategy
Olivia.Zderic@nbcuni.com
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