this article from The Register points to change in game. prepay may have
worked as a mechanism to get many more users online...... but are these
users profitable enough?
Mobile industry turns back on pre-pay market
By: Kieren McCarthy
Posted: 26/03/2001 at 12:37 GMT
As we predicted on Friday, the decision by One2One to double the price of
its pay-as-you-go phones and concentrate instead on contract customers has
sparked similar action by other UK mobile companies.
Once One2One said it would increase its pre-pay phones from £40 to £70, the
competitive pressure was off. A spokesman for the company also predicted
that the market would follow. Presumably, after One2One wasn't deluged with
bad press, the others have decided they no longer wanted to subsidise the
pre-pay market when they can get more profit and "loyalty" out of the
contract phone market.
Orange is reportedly doubling its Just Talk pre-pay pricing, although its
spokesman was pretty circumspect with us. No confirm nor deny again. We'll
be the first to hear when it officially announces that it is to increase the
price of its pre-pay package, apparently.
Vodafone has got in on the act as well. The company pointedly failed to get
back to us on Friday. It is doing the same again today although we have
learned that it is going exactly the same route as One2One. Vodafone is to
cut the "bonus" paid to distributors for signing pre-pay customers -
effectively pushing the price for its pre-pay offering up to £70, in line
with One2One.
Apparently it will also put an end to its all-in-one offering, which came
with a year's contract line rental and monthly minutes.
Are we looking at the end of the pre-pay market? No. But there is a definite
shift away from pre-pays. As ever, the industry is moving very quickly (like
superfit sheep) and as such none are too keen on talking to journalists at
the moment. There's a lot of concern floating round mobile company boards
currently, especially considering the nagging problem of 3G phones. The form
er chief technologist at BT, Peter Cochrane, has raised the possibility of
3G phones never even appearing in a recent interview with the BBC. ®
Update
Vodafone has finally got back to us. Yes, it is effectively pushing the
price of pre-pays up by "reducing subsidies". It is also putting an end to
the all-in-one service. This, according to the spokeswoman, is not
newsworthy and is simply a matter of pre-announced strategy.
Vodafone's new focus is on "customer development not customer acquisition".
A circular conversation then evolved, the sum of which is that Vodafone's
pre-pay service will be more expensive but no new contract packages or
services are to released on the market.
Quite why the mobile companies don't just admit that the price pressure is
off pre-pay phones and so they are raising the price to encourage more
people to switch to contracts, we don't know.
Related Story
One2One doubles price of pay-as-you-go phones
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Received on Mon Mar 26 17:34:23 2001