Prepaid phones dominate globally: Canadians used to contracts and subsidies

Prepaid cellphones dominate globally with major players like Nokia, Samsung and BlackBerry maker Research In Motion (TSX:RIM) meeting the demand, something that’s less common in Canada especially for smartphones, say analysts.

MONTREAL — Prepaid cellphones dominate globally with major players like Nokia, Samsung and BlackBerry maker Research In Motion (TSX:RIM) meeting the demand, something that’s less common in Canada especially for smartphones, say analysts.

Consumers often have two and three-year contracts and subsidies that help cover the cost of high-end devices like the BlackBerry, iPhone or Palm Pre.

“Canadians are not used to cellphones costing a lot of money,” PC Magazine analyst Sascha Segan said Friday. “Smartphones without subsidies are expensive.”

A BlackBerry on its own without a subsidy, depending on the model, can cost up to $700.

That’s the reason prepaid customers are generally carrying around less powerful and less expensive mobile phones, said Segan, managing editor of mobile at PCMag Digital Network in New York.

Segan said noted that in the United States, one regional carrier offers a prepaid BlackBerry for $50 a month with unlimited talk and text, email and web browsing but consumers have to pay US$450 up front for the phone.

In some countries, 85 per cent of people have prepaid phones, he said.

RIM has been offering prepaid phones in countries like Philippines, Indonesia and India and in the Caribbean.

Author Alastair Sweeny, who has written a book on the BlackBerry maker, said RIM is competing with Nokia in the developing world with prepaid phones.

“It’s very clever,” said Sweeny, who wrote in the newly released “BlackBerry Planet” that RIM is offering daily or monthly prepaid service.

“You have to offer the same services as Nokia,” he said of the world’s biggest cellphone maker.

ABI Research analyst Michael Morgan said he believes prepaid smartphones in North America would be discourgaed by the wireless carriers.

“That comes down to a pricing situation,” said Morgan, mobile devices industry analyst for the New York-area research firm.

But some consumers may want a prepaid BlackBerry if the device were priced at $99, he said.

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