Virgin Mobile USA’s CEO Says Over Half The Population Is Considering Prepaid

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Virgin Mobile USA’s CEO Says Over Half The Population Is Considering Prepaid

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Virgin Mobile (NYSE: VM) USA’s CEO Dan Schulman (pictured, right) has a front row seat to the latest trend in the wireless industry—a move by the mass market to adopt aggressively priced prepaid unlimited offers.

Schulman said prepaid interest has heightened recently as prices have fallen and perceptions have changed about the offering. Instead of it being the “poor cousin,” Schulman said cheap is chic and it has become a legitimate alternative in consumer’s minds. In fact, Virgin’s own market research has found that “well over the half of the population is willing to actively consider prepaid,” which represents an increase of more than 1,000 basis points over the past six months.

Prepaid adoption can easily be tracked through the growth of four major U.S. prepaid providers, which all are offering a $50 unlimited plan of some kind (See chart after the jump.). Last week, Boost Mobile, a Sprint (NYSE: S) subsidiary, added a jaw-dropping 764,000 subscribers and regional providers, Leap and Metro PCS, both reported year-over-year growth of more than 40 percent. Of the three, Virgin reported today that it actually lost subscribers during the first quarter, but said new pricing plans introduced during the tail-end of the period will make the company more competitive going forward. Together, the four providers represent an impressive 19.1 million subscribers.

In an interview with mocoNews, Schulman explained there’s two major forces behind this trend, and offered his perspective on how he believes the prepaid and postpaid markets will shake out in the near future.

His thoughts after the jump…

The economy and pricing is driving this trend: “Two things have absolutely occurred. The economy has made people much more cognizant on what they are spending, and prepaid over the years has gotten much more aggressive as opposed to postpaid. Although [prepaid] was growing slightly, it wasn’t growing a lot..If you can get postpaid, it was the way most people went.” Schulman also believes that even if the economy recovers, consumers will continue to be frugal. “Given the severity of what people have gone through…I think the memory of what occurred will last with consumers for quite some time to come.”

The role of prepaid and postpaid operators: Schulman said two camps are forming in the wireless industry. In his opinion, he sees the postpaid market going forward as a place where people will seek a phone subsidy, an iconic device, like the iPhone; or heavy data usage. But if you are primarily into making phone calls, and simple messaging, like sending text and emails, prepaid is good enough for you. “If that’s what you are primarily into, then prepaid has become a better deal than postpaid. From a per minute perspective, if you line up our suite vs. postpaid, we pretty much are better at every minute level now.”