Consumers Union found that over half of the companies providing residential service in six large Texas metropolitan areas provide services to customers in this segment only. By accepting customers rejected by SWB or GTE, these companies are expanding the market but providing limited competition to the much less expensive monopoly. Although this new market enables customers without phones to get service, access to such phone service is not cheap. Companies that serve this market claim that high rates compensate for the high risks they take by serving a population that has a history of payment default. However, every one of these companies surveyed by CU offer pre-paid services only.
Customers pay for monthly service up front.
Thus, there is no risk involved. If customers do not pay, they do not get service. Since customers in this segment have few choices, they are forced to pay these higher rates if they want any telephone service at all. Furthermore, customers in this segment must often go through a lot of trouble to get phone service. PCS's strategy is not unique in this segment.