Shared from the 5/27/2019 The Miami Herald eEdition

ROCK-BOTTOM PHONE RATES ARE GROWING

Dania Beach-based Hello Mobile, led by founder and CEO Issa Asad, is among a growing number of low-cost secondary carriers that buy excess capacity from the Big Four carriers and resell it on the retail market as prepaid pay-as-you-go service.

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IPOPBA Getty Images/iStockphoto

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Hello Mobile

Hello Mobile is led by founder and CEO Issa Asad.

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Remember the $200-a-month cellphone bill?

You bought service from AT&T, Sprint, Verizon or T-Mobile and financed your phone with 24 or more payments added to your monthly bills. You’d get confusing statements loaded with taxes and administrative fees.

Wait, you’re still paying those big bills? That’s great. Keep doing it. Because you are making it possible for prepaid services like Dania Beach-based Hello Mobile to offer rock-bottom rates to the rest of us.

Hello Mobile, led by founder and CEO Issa Asad, is among a growing number of low-cost secondary carriers that buy excess capacity from the Big Four carriers and resell it on the retail market as prepaid pay-as-you-go service.

For $10 amonth, Hello Mobile customers can buy unlimited talk and text, plus 1GB a month of high speed 4G data. More data is available at higher prices, including unlimited everything for $25 a month for the first three months and $40 a month after that.

Other resellers offer similar bundles, including Mint Mobile, Gen Mobile, Red Pocket Mobile, Unreal Mobile and FreeUP Mobile. They have recently joined the reseller market pioneered by better known carriers such as Boost Mobile, Straight Talk Wireless, Cricket Wireless and Net10 Wireless, some of which are owned by the Big Four.

These deals come at a time when the landscape is shifting for the country’s wireless industry. Last week, T-Mobile and Sprint moved a step closer to completing their long-sought merger, securing the public support of the Federal Communications Commission’s chairman for a deal that would reshape the industry.

The resellers say their services are every bit as fast and their coverage areas as broad as customers of the major carriers get, though some reviewers have noted they are subject to occasional slowdowns if their networks are congested.

But don’t look for these smaller companies to take over the wireless industry and siphon away all of the Big Four’s customers anytime soon, says Phillip Berenbroick, senior policy counsel for Public Knowledge, a nonprofit organization in Washington, D.C., that advocates for telecommunications policies that benefit consumers.

The major providers still command about 95 percent of the wireless market, leaving the resellers to compete for consumers who want to save money, don’t have good enough credit to get traditional service, or don’t mind the data cap tradeoff, Berenbroick said.

The major companies use their marketing muscle to keep their customers loyal, he said, with strategies that include locking customers into long-term phone financing and bundling with internet and TV services. They’re content to let the secondary carriers have the customers they view as less valuable.

“The big companies see themselves in a different market — selling a premium service to customers willing to pay enough for it,” he said.

But Asad mines gold out of the market that the big companies ignore.

A South Florida resident since he was 15, Asad bought a convenience store after finishing college in the mid-1990s, but quickly realized more money could be made distributing long distance calling cards to retailers.

Calling cards morphed into the pay-as-you-go cell service industry in the early 2000s, and Asad created his own phone service company, Q Link.

He targeted the sizable market of low-income customers who qualify for free phones and service through the federal government’s Lifeline service. You know them better as “Obama phones.”

“It actually has nothing to do with Obama,” Asad said. “It was invented in 1985 under [President] Reagan and it used to only offer home phone service.”

Funded by taxes levied on telecommunications services, Lifeline pays participating carriers $9.25 per month to provide free or discounted phone service, with arequired 2GB a month of 4G LTE data, to qualifying consumers.

Q Link became Lifeline’s third-largest provider after amassing 2.5 million customers in 30 states. It buys so much capacity that the company has become Sprint’s largest customer, Asad said.

Despite being headquartered in Dania Beach, where Assad employs more than 350 workers, Q Link is currently barred from offering Lifeline service to low-income Florida residents, he said. A Q Link spokesman said Florida no longer grants Lifeline service access to new applicants, and the Federal Communications Commission has not issued a new Lifeline permit since 2011.

Asad urges low-income consumers in Florida to take advantage of one of Hello Mobile’s low-cost prepaid plans. If $10 for unlimited calls, texts and 1GB of data costs too much, the company also sells a$5 plan with 500 minutes of talk time and unlimited texting.

Hello Mobile can offer those low rates because Q Link buys so much Lifeline capacity from Sprint, Asad said. “We also make money off customers downloading apps,” he said. “We run ads inside of apps, and we do things like give more data if customers watch ads, like from Walgreens. We do a lot of things with the customers that keeps them engaged.”

The low rates might not last if the proposed merger of Sprint and T-Mobile is approved by the government, Berenbroick said. Excess capacity available from a combined company would likely decrease, driving up prices for the resellers, he said.

Nor should existing customers want the services to become too popular.

If too many of the major carriers’ customers started to realize what they could save by switching to pay-as-you-go plans, the Big Four’s willingness to sell their excess capacity to the resellers at discount rates would likely change quickly, Berenbroick said. “The second that the resellers become viable competitors, the major carriers would likely cut them off.”

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