TracFone, the makers of Straight Talk, have purchased Simple Mobile

Prepaid is increasingly becoming popular in the United States. With all this economic uncertainty, people are looking to take control of their phone bill, and what better way to do that than to not lock yourself into a two year contract? TracFone is America’s largest prepaid operator, with over 20 million customers using their various sub-brands. You’ve probably heard of Straight Talk, which offers “unlimited” everything for $45 per month. We say “unlimited” because after you consumer 2 GB of data you get a very angry phone call informing you that you’re going to be disconnected. Another prepaid operator is Simple Mobile. They rely on T-Mobile’s network and have roughly 1 million customers. Yesterday América Móvil, the company that owns TracFone, announced that they’re going to purchase Simple Mobile for an undisclosed sum of money. Why? Because T-Mobile is in the process of refarming some of their 1900 MHz spectrum to support HSPA+, which means T-Mobile customers will soon be able to get 3G connectivity on their iPhones.

What does this news mean for you? Probably nothing, it’s just the industry consolidating. The larger the TracFone brand becomes, the more recognition the prepaid business model will get, and that’s not exactly a bad thing. How does TracFone sell service so cheap compared to the companies who actually build out networks? They have low overhead. Tech support is virtually non-existent, they rely on convenience stores and gas stations to sell their SIM cards, they don’t run huge advertising campaigns, and they don’t subsidize devices.

The more important question is why don’t today’s mega operators function more like the smaller prepaid guys? At the end of the day, an operator is just a pipe, and if they can offer service for 50% off simply by spending less on stores, ads, and subsidies, then maybe they should just admit that they need to change.

  • I’ve been using Simple Mobile since Feb (lovely joy of owning a penta-band Nokia), and it’s been decent. About the only issue I have had is in sending vCards via MMS. Service quality has been fine, and w/exception of a few indoor places, data speeds been fine. Unlimited everything for $40/month is my idea of progress in mobile. Indeed, thisis something other carriers should be doing more loudly, but they will in time. Or, people w/o extra dollars to spend will figure it out and move away for post-paid, subsidy-driven mobility.

    I do wonder wht this purchase means fr me service wise. Would suck if charges went up too much or quality of service diminished much.

    • Erica S

      I think there’s much speculation as to how the 2 will merge. I reckon Tracfone will keep Simple mobile running as they currently are; each of TF’s subsidiaries offer different benefits depending on customer needs, from their basic and low monthly cost options, right through to StraightTalk’s unlimited everything for only $5 more than Simple Mobile’s $40, but with the option of using any of the 4 big networks, as opposed to SM’s T-Mo only network. Simple Mobile will bring the benefits of their $60 unlimited 4G speeds as well as the option of a Blackberry. Tracfone has never been big on high monthly charges, so don’t see that as being a problem. I think this move will just make TF and subsidiaries a bigger force to reckon with!

  • As much as I’ve been in mobile, I’ve never really understood how these MVNOs make money, and why the major carriers (Sprint is the most open, followed by T-Mobile) allow them to use their network in the first place, since they’re obviously stealing customers, especially with the latest round of pricing/plans. 

    I mean, I get that they buy airtime/access at wholesale prices, but it still seems odd for the major carriers to let this go down with increasing competition (and increased whining from the Big Four about spectrum and capacity and such).

    • Operators make money by selling you a phone with a subsidy, better known as a loan, with the terms they dictate. In other words, they rape your wallet. They also sell accessories that they buy from suppliers for $1 to consumers for $20.

  • Anonymous

    I have a Tracfone and have always had great service from it. I am delighted that they are taking more of the market as they have a great, low cost ethos and it can only be good for consumers.

  • G5ertt

    Carlos Slim Helú is the owner and the biggest d!(k I’ve seen in years. I keep getting robbed by these a$$h0l3s and I’m damn sick of it.

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