America Movil Finds Prepaid Cell Service Can Succeed In U.S.; Gains beat Industry Average; TracFone Wireless in mold of its parent's businesses in Mexico and Latin America.(INTERNET & TECHNOLOGY)

Byline: REINHARDT KRAUSE

Wireless phone company America Movil's prepaid strategy has paid off in Mexico and Latin America. Now its U.S. unit, TracFone Wireless, is making inroads with prepaid.

TracFone's subscriber base has climbed 82%, four times overall industry gains, to 3.35 million in the last 18 months. It's the biggest prepaid wireless firm in the U.S., ahead of Virgin Mobile USA's 2 million subscribers.

"We're 100% focused on prepaid," said TracFone Chief Executive F.J. Pollak. "We know how to make money in this business."

Prepaid customers buy a flat package of minutes that they must use up within a set period, often two months. All U.S. wireless firms offer prepaid, but most are leery of driving growth through such subscribers, because they're less profitable than subscribers billed monthly.

And prepaid subscribers disconnect service or switch providers more often than other customers, since they're not under contract.

Yet the prepaid market is growing fast. It appeals to students and others with little or poor credit histories who might have trouble subscribing to monthly billed service. And depending on how much people use their cell phones, prepaid can be cheaper. Many prepaid subscribers just want to keep a mobile phone handy for emergency use.