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Mobile

AT&T gives green light to credit risks

The carrier tries to find new customers by selling GoPhone, a service plan without requiring credit checks, long-term contracts or deposits.

AT&T Wireless on Monday became the latest U.S. carrier to introduce cell phones and subscription plans meant for teenagers, young adults or people with bad credit histories.

GoPhone is a pared down version of the carrier's regular cell phone service. It comes less airtime per month that can be used anytime of day. Like similar plans from other carriers, GoPhone doesn't require credit checks, deposits or long-term contracts.

"We turn down nearly half of our customers because we believe they didn't have adequate credit," said Michael Sievert, AT&T Wireless chief marketing officer.

GoPhone is the latest example of tactics used by U.S. carriers to reach people who can't afford a phone subscription or wouldn't pass a credit-history check. This market is estimated to be about 25 percent of the U.S. population.

Cell phone carriers have been struggling to find new customers as the base of potential cell phone users dwindles. The latest estimates show that half of all Americans living in any of the United States' 44 major metropolitan areas have cell phones.

Some of the other carriers offering similar plans have had mixed results. Virgin Mobile, a joint venture of Sprint PCS and Sir Richard Branson's Virgin empire, has attracted about 500,000 subscribers in its first nine months. Nextel Communications' Boost Mobile line of phones and services isn't doing as well, with only about 30,000 subscribers.

Sprint PCS' plan, which it introduced several years ago, created a financial risk for the company at one point. Hundreds of thousands of customers using the plan either failed to pay their bills, or did so fraudulently, so late last year, the company began requiring deposits.

AT&T Wireless thinks it has a safeguard in place to prevent such abuses. Sievert said customers will have to provide a debit or credit card, which the company will automatically charge each month.

GoPhone subscribers will also have to buy a phone, a Nokia 3590, for $90. The phone is on sale at 10,000 stores, including Target, 7-Eleven and CompUSA. Subscribers will also have to pay between $20 to $50 for each month of service, depending on how much airtime, or how many minutes, they use.