Trends in the cellular phone market have changed in recent times. Even though the cell phone sector continues to grow, classic post paid programs are shrinking in total market share. Post paid programs are quickly being succeeded by cheaper prepaid cell phones plans.

The two types of phone plans are prepaid and post paid. With prepaid, you purchase your airtime upfront. With post paid, you use your airtime then you are charged at the end of 30 days. Post paid programs require a credit check and consumers are required to sign a contract given that they pay for their minutes after they've used them.

The cell phone market has grown every year since its start, and the general trend for the market is growth. More than 80% of the population of the US currently use mobile phones. That trend continues to grow, although much more slowly now than in preceding years.

Conventional contract plans are the major niche within the cell phone market and that niche has increased yearly. Nevertheless, in 2008 the growth began to slow. From 2008 to 2009 the net additions of new post paid subscriptions fell 58% across all major carriers. In 2009 new post paid subscription growth essentially stopped and the industry share is now getting smaller.

In the mean time, prepaid subscriptions are growing. In 2008 in excess of 50% of new cellular users subscribed to prepaid cell phone service. The following year, in 2009, in excess of 80% of new cell phone subscriptions were from prepaid service plans.

Prepaid cell phone plans have, in the past, been used by a couple of different types of people: students and consumers with bad credit. Due to the fact traditional post paid plans require a credit check, many people have been incapable of buying a traditional post paid cell phone. In times past, those people with bad credit or no credit have comprised the majority of the prepaid market. The one negative aspect of prepaid plans, up until lately, was that they were more expensive than contract plans.

Prepaid Is Now Lower priced
Three years ago the price of prepaid plans started to drop. At this point, prepaid phone plans are actually cheaper than post paid plans. Numerous prepaid service providers are now providing unlimited minute plans that can be less expensive than similar contract plans that have 500 minutes of airtime. The current affordability of prepaid plans and the downturn in the economy are fueling the intense growth of the prepaid cell phone market.

Naturally, the chief network carriers are not happy with this since they earn much more revenue on post paid plans as compared with prepaid. There are a few causes for this is. The first is that post paid programs are more expensive than prepaid cell phone plans. Classic post paid service plans can run in excess of $80 a month while a prepaid plan with comparable airtime may be as cheap as $40. Second, not only do cell phone providers earn a great deal more profit on post paid service plans, they are also guaranteed a steady, recurring income stream by locking their customers in with long term service contracts. The 3rd reason post paid plans are so financially rewarding for the mobile providers is because they charge expensive rates if you go over your airtime allowance, quite often 25 or 50 cents per minute. This adds up quickly and a lot of people have accidentally run up huge cell phone bills of many hundreds of dollars.

As expected, with prepaid plans, you won't have this issue. Prepaid service plans are currently less expensive per minute and they do not require contracts. Also, if you exceed the minutes that you've purchased, you can just buy more minutes - or not.

Post paid plans continue to be popular with clients. The reason is that the handsets that they sell are less expensive. A lot of consumers continue to pick post paid plans because they can not afford a $500 mobile phone. The carriers subsidize the price of the handsets when consumers sign a two year contract. Prepaid phones, on the other hand, are more expensive considering that none of the price is subsidized. Consumers have to pay top dollar for prepaid models. What customers don’t understand is that with contract plans, the cost of the cell phone is subsidized because the cell phone companies know that over the course of a few years they'll make up the price tag of the phone (and even more.)

Prepaid plans continue to gain overall market share, though. They simply just make more sense for consumers financially. We've been in a recession for many years and there is no end in sight. The lower overall price tag of prepaid mobile plans make them more desirable for consumers as compared to traditional contract plans.