(Bloomberg) -- Verizon Communications Inc. is preparing to launch a pay-as-you-go home wireless internet service next month aimed at bargain hunters, doubling efforts to find growth in the prepaid market as regular subscriber gains prove challenging.
Through a partnership with a major US retailer, Verizon will sell customers an in-home router to connect to an outside wireless network, spreading a Wi-Fi signal throughout the house, according to people familiar with the company’s plan who asked not be identified because the product hasn’t been announced publicly.
Unlike regular subscribers who pay for service at the end of the month, prepaid customers will have to pay in advance for each month of service. Verizon’s prepaid service will rival T-Mobile US Inc.’s $50-a-month Metro broadband that launched in March. The new entry will give cordcutters and so-called cordnevers another cheap way to access the internet at home without landlines.
The wireless broadband alternative arrives at a time of economic uncertainty as US consumers face rising prices and the prospect of a recession.
“There is always a market for prepaid offerings, and times of economic disruption make them even more appealing to budget-conscious shoppers or those whose credit histories keep them from qualifying for postpaid service,” said Tammy Parker, an analyst with GlobalData.
After years of ambivalence about the prepaid market, Verizon is now targeting customers with little or no credit history, like home renters, students and people without bank accounts, as an area of growth. Verizon became the largest prepaid mobile phone service in the US last year when it bought Tracfone for $6.6 billion. Last week, in its first big push since the deal, Verizon unveiled Total, a prepaid brand to compete with Metro from T-Mobile and Cricket by AT&T Inc.
With this latest move, Verizon will be able to offer its Total customers a package of prepaid wireless home broadband and mobile service with discounts or perks to boost subscriber gains. The company has fallen to the back of the three carrier pack on postpaid customer growth this year.
Another broadband alternative entering the market adds to the ongoing woes for the cable industry. Cable giants like Comcast Corp., Charter Communications Inc. and Altice USA Inc., have been losing TV customers for years. Since the arrival of wireless broadband alternatives, cable’s internet subscriber gains have all but stopped.
Goldman Sachs Group Inc. analyst Brett Feldman expects broadband subscribers to be down 25,000 in the third quarter for the big three cable giants, according to his note this week. On the flip side, Feldman predicts that T-Mobile and Verizon will capture all the broadband growth in the quarter fueled by home wireless internet service offers.
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