The key to prepaid, often viewed as the last resort service in the ., is positioning, said Eugene Signorini, wireless analyst for The Yankee Group. "Sprint's ASL plan looks like postpaid because consumers get competitive rates without any stigma, but it also has a prepaid aspect to it."

The difference is that ASL offers credit-risk consumers a spending limit, upward of $200, as opposed to an upfront deposit. Unlike prepaid plans, ASL also often involves a one-year contract, and each month the spending limit remains unchanged - as opposed to prepaid cards, which are to be replenished by consumers at their own convenience. ASL was designed to build carrier loyalty and reduce churn, which historically has been high among prepaid users.

"Prepaid is one of the things driving churn," said Mohan Gyani, president and CEO of AT & T Wireless, which saw its churn rise to % for the second quarter, with the prepaid portion of that rising 50 basis points. "The economics of prepaid are very different, and we expect higher churn than with postpaid."

Sprint PCS, however, is targeting up to two-thirds of the . population that is credit-challenged or has no credit and simply has not been penetrated yet, said Ronald LeMay, Sprint's president and chief operating officer.

"The most common product has been prepaid, but unfortunately, it has been only marginally profitable," LeMay said. "For PCS, the net present value of customers on an ASL plan exceeded that of the average prepaid customer."

Sprint's results will lead to similar offers from other carriers in the next six months. Signorini predicts there will be an increasing number of innovative prepaid-like offerings from carriers as they realize that a large number of consumers are unwilling or unable to fully commit to wireless service.

Cingular Wireless plans to relaunch its prepaid offering in November, said a spokesman. "We are trying to come up with a plan that is competitive, easy to recharge and offers value-added services like long distance, voice mail, caller ID and better models of phones," he said. The challenge has been building customer loyalty because prepaid customers aren't tied to any particular carrier, he said.

AT & T Wireless previously promoted its prepaid efforts but is now aggressively shutting down its traditional prepaid programs, in part because of higher churn. Chairman and CEO John Zeglis made a point of highlighting that the percentage of total prepaid customers during AT & T Wireless' third quarter dipped and that the carrier will increase its focus on higher-value customers.

In place of traditional prepaid plans, AT & T is migrating customers to an enhanced prepaid wireless program, Gyani said. He maintained that the number of prepaid customers as a percent of AT & T's total customer base remains minimal, but that the carrier still believes prepaid can help increase market penetration.

With additional reporting by Lynnette Luna in Denver.