• by Mark Walsh  @markfwal, August 10, 2009

Expansion of the prepaid market has been one of the few bright spots for wireless carriers during a recession that may have slowed growth in other aspects of their businesses. That trend continued during the second quarter with Sprint's prepaid Boost Mobile service adding nearly a million customers even as the carrier continued to lose postpaid, or contract, subscribers.

For T-Mobile, prepaid made up 82% of the carrier's net added customers in the second quarter, up from 61% in the first quarter and 21% a year ago, according to new quarterly data from wireless research and consulting firm Chetan Sharma. Of course, the major carriers would rather not have prepaid accounts come at the expense of more lucrative postpaid, or contract, customers.

Whether an improving economy will bring prepaid users back into to the postpaid fold is a looming question. "It is quite likely that 50-60% of such consumers don't go back to postpaid thus permanently lowering the average revenue per user (ARPU) base for such customers and carriers who have experienced more postpaid to prepaid shift will have to make up for the lost revenues elsewhere," according to Chetan Sharma.

Even for some of the smaller carriers focused on the prepaid market, the recent growth spurt has proved a double-edged sword. MetroPCS reported a 48% drop in profits in the second quarter as net customer additions dropped from the prior quarter and its churn rate increased amid heightened competition that has sparked a price war in the segment.

For the major carriers, smartphones hold the key to higher revenue through increased data usage by contract customers. In the first quarter, revenue from mobile data services in the U.S. surpassed $10 billion for the first time. It eclipsed that figure again in the second quarter and as a result Chetan Sharma has increased its mobile data revenue estimate to $45 billion for 2009.

The firm's report also states: "There is also a concerted effort underway to move beyond the traditional subscriptions and expand the mobile universe to wireless-enable other consumer devices (What did your refrigerator say to your microwave while you were gone?)." Now that's a conversation we're all dying to hear, right?