On Tuesday, October 30, 2001, at 11:09 , Daniel Helmer wrote:
> I'm a bit curious as to why it is the Vodafone influence that leads
> J-Phone to push for prepaid. I would think the opposite.
And I am curious as to whether you can back up what appears to be a
generalisation that prepaid mobile is unprofitable.
> In Europe, Vodafone has really been in the forefront of moving away
> from prepaid. In maturing markets (I think we can consider Japan a
> maturing market as well), operators like Vodafone have started
> emphasising heavily on keeping and up-selling profitable customers, and
> trying to get rid of the unprofitable ones (eg. prepaid). Penetration
> rates and market share are losing flavour. I bet many operators now
> regret they pushed so hard for prepaid a few years back...
Quite the opposite. I have recently attended the annual IIR conference
on Prepaid Mobile. Like on other such conferences before, many speakers
have been from European mobile telcos and they are proud of their
prepaid services' profitability. The industry is now moving towards
offering value added services (previously confined to postpaid) to their
prepaid customers.
> Here in Australia, Vodafone 'proudly' announced they lost 41,000
> subscribers (mainly unprofitable prepaid 'riffraff') in the last
> quarter. Both Vodafone & Telstra are now removing handset subsidies
> altogether (not good for GPRS take-up, but that's another story)...
Well, in Italy, VodaFone would have to give up pretty much all of their
customer base if they wanted to get rid of "prepaid riffraff" for there
isn't much else in Italy (90% prepaid and still rising).
I don't think one can generalise based on the situation of VodaFone in
Australia. Their FastFone product (prepaid) has in fact been credited
with largely contributing to them achieving market leadership and it was
profitable last time I looked for it was run as a profit centre and an
outsourced unit (by PRACOM/Unidial) ever since VodaFone bought the
business some years back.
FastFone's problems do not stem from adverse selection. Instead,
VodaFone were resting on their laurels. They were late to invest in
prepaid IN and they did not respond fast enough to Optus' sexy marketing
who more recently established their product as the most attractive
prepaid service.
In Europe VodaFone's situation is quite different. Dealing with immense
volumes in Italy, they have realised that prepaid IN was important to
deal with capacity issues earlier than others and they are the only
group that seem to have fully committed themselves to CAMEL, the main
driver behind which is to offer prepaid roaming. At the same time
anybody else is shying away from the huge investment CAMEL requires and
companies are looking for alternatives.
The fact that operators are now cutting down on handset subsidies
doesn't necessarily mean bad news for prepaid. It could well mean a
further boost. In the UK Virgin Mobile have established themselves very
well with a business model by which all customers are prepaid by default
but have to buy their handsets themselves in full without any subsidies
but enjoy tariffs without a subsidy-payback component.
regards
benjamin
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Received on Wed Oct 31 03:29:53 2001