MetroPCS Communications (NYSE: PCS) is a wireless phone company that targets youth and minority demographics, offering service without requiring a contract or a credit check; this differs from traditional wireless carriers such as AT&T Wireless and Verizon Wireless. The company's unlimited voice plans start at $30 a month, and youth and young professionals form 55% of MetroPCS's customers.^[1] Furthermore, MetroPCS' attention on densely populated urban markets has helped it achieve the highest margins (14.5% operating margin in 2009) and customer growth rate (42% annual) in the wireless industry over the past three years by keeping distribution and capital expenditures per potential customer low.^[2] The company spends $124 on average per new customer added, compared to the industry average of $358.^[3]

85% of its customers use MetroPCS service as their primary phone service and 55% do not own any other phone service, reducing the risk that customers will cancel their service in an economic downturn.^[4] This mitigates the company's exposure to low-income demographic trends, which are a risk given its focus on urban communities. However, customers do not have contracts with MetroPCS, which creates pricing pressure that intensifies in a recession. The lack of contracts means MetroPCS's customers can easily switch to alternatives such as landlines, VoIP, or plans offered by MetroPCS's direct competitors, Cricket/Jump Mobile and Sprint Boost Mobile, if they view these plans as a better value.

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