Feeds

Mobile operators seek to convert pre-paid masses

The Great Unwashed

  • alert
  • submit to reddit

Secure remote control for conventional and virtual desktops

European mobile operators facing massive debt and market saturation are now examining the value of their less profitable pre-paid customers, Ciaran Buckley writes.

The finding is included in a new IDC bulletin, entitled "Customer Retention Strategies in the Western European Mobile Market, 2002." According to the research document, many mobile operators are still facing almost insurmountable debt, thanks in part to the high cost of 3G licences. As they look to pay creditors and face a saturated market, the telecoms have shifted their focus in order to reduce high subscriber acquisition costs (SAC) and churn levels, and are instead looking to their more profitable contract (post-paid) customers.

The attempt to reduce SAC has been focused on the pre-paid market, which constitutes 80 percent of some operators' subscribers, but only generates around one fifth of revenues, research indicates. Converting the 170 million pre-paid customers in Western Europe to contracts is seen as an important step in the process of retaining profitable subscribers.

"Operators had accumulated large bases of pre-paid customers in excess of 60 percent who were not spending money," said Paolo Pescatore, a senior analyst for IDC's European Wireless and Mobile Communications Service. "Pre-paid has led to more headaches than operators had initially expected - higher SAC and increased churn."

Operators aren't likely to alienate active pre-paid customers by nudging them into contracts said Paolo Pescatore of IDC, the author of the bulletin, while speaking to ElectricNews.net. "The pre-paid customers who are using their mobile phone will find that it's cheaper to be contract a contract customer," said Pescatore. "The line rental includes free calls and text messages and calls are cheaper."

Many operators only offer advanced services such as multimedia messaging and entertainment services to contract subscribers, but Pescatore believes that they will ultimately have to roll them out to pre-paid customers. "Ultimately the operators can't afford to ignore the huge pre-paid market," he observed.

Pescatore believes that the operators will have to develop new billing systems to accommodate the pre-paid market. "Text messages are charged on a per unit basis, rather than on the size of the message," said Pescatore. "MMS messages will have to be charged based on the size of the message, so billing solution providers are going to have to come up with a solution for pre-paid users."

Commenting on the high average revenue per user (ARPU) figures enjoyed by Vodafone and O2 in Ireland, Pescatore said, "Either the Irish operators have been more successful in encouraging subscribers to use voice and data services, or else that there is a lack of competition in the market." He continued, "It's less likely to be the lack of competition, because new operators can enter the market to offer more competitive services."

© ENN.

5 things you didn’t know about cloud backup

More from The Register

next story
UK fuzz want PINCODES on ALL mobile phones
Met Police calls for mandatory passwords on all new mobes
Canadian ISP Shaw falls over with 'routing' sickness
How sure are you of cloud computing now?
Don't call it throttling: Ericsson 'priority' tech gives users their own slice of spectrum
Actually it's a nifty trick - at least you'll pay for what you get
Three floats Jolla in Hong Kong: Says Sailfish is '3rd option'
Network throws hat into ring with Linux-powered handsets
Fifteen zero days found in hacker router comp romp
Four routers rooted in SOHOpelessly Broken challenge
New Sprint CEO says he will lower axe on staff – but prices come first
'Very disruptive' new rates to be revealed next week
PwC says US biz lagging in Internet of Things
Grass is greener in Asia, say the sensors
Ofcom sees RISE OF THE MACHINE-to-machine cell comms
Study spots 9% growth in IoT m2m mobile data connections
O2 vs Vodafone: Mobe firms grab for GCHQ, gov.uk security badge
No, the spooks love US best, say rival firms
Ancient pager tech SMS: It works, it's fab, but wow, get a load of that incoming SPAM
Networks' main issue: they don't know how it works, says expert
prev story

Whitepapers

Endpoint data privacy in the cloud is easier than you think
Innovations in encryption and storage resolve issues of data privacy and key requirements for companies to look for in a solution.
Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Top 8 considerations to enable and simplify mobility
In this whitepaper learn how to successfully add mobile capabilities simply and cost effectively.
Solving today's distributed Big Data backup challenges
Enable IT efficiency and allow a firm to access and reuse corporate information for competitive advantage, ultimately changing business outcomes.
Reg Reader Research: SaaS based Email and Office Productivity Tools
Read this Reg reader report which provides advice and guidance for SMBs towards the use of SaaS based email and Office productivity tools.