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Pre-paid mobile phone users will be critical to the success of the emerging m-commerce mobile data market, according to a new report by Analysys, Ciaran Buckley writes.

The report, "Enabling Prepaid Mobile Content and Data Services: Strategies for Operators and Vendors," argues that the 170 million customers currently on pre-paid packages across Western Europe are in danger of being ignored by mobile operators. Despite the dominance of pre-paid users in terms of customer numbers, most operators have only made advanced services, such as multimedia messaging and entertainment services, available to their contract customers.

"Pre-paid customers already account for 63 percent of active mobile users in Western Europe, and despite operator efforts to convert them to contract subscriptions [they] will remain a substantial segment of the mobile market for at least the next five years," said lead author Emily Turnbull.

GPRS and UMTS are new-generation mobile phone standards that allow greater data volumes through the mobile networks. These standards are expected to popularise mobile commerce by facilitating the sale of content through mobile networks.

A 2001 report by Frost and Sullivan found that although up to 80 percent of some mobile phone operators' customers are pre-paid, they generate only 20 percent of revenues. For this reason, many operators have attempted to nudge pre-paid users into contracts by reducing subsidies on their pre-paid phones, by charging extra for calls and by raising the minimum credit threshold for pre-paid customers.

Speaking to ElectricNews.Net, Turnbull warned that attempts by operators to force pre-paid customers into contracts by excluding them from next-generation phone services may make customers take their business elsewhere, to operators who are prepared to offer parity of service.

If operators make next-generation services available to pre-paid customers by early 2003, Analysys estimates that residential pre-paid users could generate EUR16 billion in GPRS and UMTS non-voice service revenue by 2007. Because many young people are pre-paid customers, they could also be early adopters of shopping by mobile phone, which would generate significant revenues for the operators, as well as the content providers.

"My feeling is that operators need to launch new services simultaneously for pre-paid and billing customers," said Jack McDonnell, director of marketing and business development at Altamedius, a company whose software powers micro-payment services for operators like Vodafone. "That's the ideal. I don't know that it's technically possible yet."

McDonnell believes that the technical problems lie in the limitations of operators' billing systems, which currently use complicated rating rules to facilitate content charges that are bundled with airtime charges. Under the current technology, content charges can only be charged to the user's pre-paid or post-paid mobile phone account.

McDonnell believes that in the long-term, operators will have to allow content providers to set their own charges for content, while charging separately for airtime. Operators are also expected to give the option to have content billed either to the consumer's phone bill or to a credit card.

© ENN. All rights reserved.

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