August 15, 2006
Easy to Resell, Prepaid Phones Rankle Carriers
Wireless carriers are struggling to combat a growing number of opportunistic middlemen who purchase pre paid handsets in large numbers at discounted rates and resell them for a significant profit, often overseas in countries like Mexico and China, according to the WSJ, commenting ont he false arrest of the men in Michigan who were thought to be terrorists. (Picture left from ABC)
"Middlemen are taking advantage by purchasing the phones from one carrier at a discount, and repurposing them to be used elsewhere.
The problem is becoming more acute as the prepaid phones business grows as a percentage of the wireless carriers' overall business. Last year, the wireless industry saw $7.4 billion in prepaid phone sales, up 44% from 2004, and there were 26 million prepaid users, according to the market research firm Gartner.
Some carriers, like Sprint, are increasingly relying on prepaid phone usage as they struggle to add traditional "post-pay" subscribers."
But the WSJ fails to mention that in many countries, users must register their names and adresses to purchase a prepaid card or phone, for the very reasons of curbing terrorism and cracking down on telephone fraud or illegal sales.
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