Larger carriers losing prepaid phone sales to smaller players

Top carriers such as Verizon, AT&T, and T-Mobile are losing sales of prepaid smartphones to the likes of Boost Mobile, Virgin Mobile, and MetroPCS, according to an NPD report out today.

Third-quarter prepaid smartphone sales for the smaller carriers rose 23 percent over the prior quarter. But sales among the tier-one carriers dropped by 12 percent over the same period. Why? The smaller players won over customers by offering lower prices and a larger selection of prepaid phones, NPD said.

In the third quarter, 70 percent of smartphone buyers who bought their phones through a prepaid carrier had switched from a tier-one carrier. Consumers replacing their mobile phones were more likely to switch from a tier-one carrier than were first-time smartphone buyers.

"Both AT&T and Verizon have introduced less-expensive prepaid offerings, and Verizon has expanded its prepaid smartphone lineup, but questions remain whether it's too little, too late," NPD Analyst Stephen Baker said in a statement."

Of all the smartphones sold in the third quarter, 42 percent were prepaid phones, NPD said. That's an increase from the second quarter, when 39 percent of all smartphones sold were prepaid ones.

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