BRIC Consumers Prefer Prepaid Mobile Plans

When it comes to paying for mobile phone service, the majority of Americans relies on contract plans. Phone contracts typically last two years and offer the benefit of an often heavily subsidized phone. A 16GB iPhone 5 currently costs $199 with a two-year contract and $649 without a contract. In 2012, 85 percent of U.S. smartphone owners and 70 percent of feature phone owners were on a contract plan.

In other parts of the globe, two-year plans are far less popular. In emerging economies, such as the BRIC nations, prepaid plans are far more common. In these countries, where the available income is typically much lower, mobile phone users are apparently hesitant to commit to fixed payment plans and prefer the flexibility of prepaid services.