IN AN emerging market like India, the telecom industry has a lot of scope to expand its customer base. While in most developed economies a lot of thrust lies on developing advanced applications, in India the thrust lies in innovating on the cost front to extend reach of the telecom to the masses and India has indeed been extremely successful on this
We consequently see high levels of penetration, which we believe will continue to grow.
The prepaid market continues to be one of the strongest growth engines in the communications, media and entertainment industry with yearly service revenues expected to reach over $380 billion by 2013. Prepaid service providers now represent some of the largest providers in the world with customer bases exceeding 100 million subscribers. Within the next four years, it’s estimated that prepaid subscribers will account for nearly 75% of the worldwide mobile subscriber base –
Are you ready for the prepaid revolution?
It may not be a new concept, but prepaid is certainly on the rise. It’s attractive in both high-growth markets, where it offers a cost-effective solution to low-spend customers, and developed markets, where millions of customers are looking for a more economical, controlled way to consume mobile services.
Recent research from the Informa Group indicates that prepaid accounts for 70% of total subscriptions worldwide and is expected to reach 76% by 2014.
Even in the US, a traditionally postpaid-dominated market, prepaid growth is on the rise, as leading carriers report higher prepaid than postpaid net additions.
So why are people choosing prepaid?
There are a number of reasons, including the fact that some people just don’t have a choice. In those parts of the world where the general population does not have a bank account, prepaid is the only option. In other areas, the most common reason for choosing prepaid is that customers want to control their spending, especially if they are on a tight budget. This explains the prevalence of prepaid services in emerging economies.
And as a result of the global economic crisis, developing countries are also seeing a sharp increase in the consumption of prepaid services due to the “no contract” element. Customers who feel insecure about their future may continue to spend today, but are looking to shun long-term financial commitments.
Prepaid is constantly changing
In the past, the choice for prepaid subscribers was limited. The available range of services boiled down to simply voice and text messaging, a prepaid subscriber was offered only a narrow variety of basic phones and business and pricing models concentrated on “pay-as-you-go” models.
Cricket Mobile in the US offers unlimited, daily price plans and customers can change package any day. They need not pay on days when the phone is not used
The recent worldwide proliferation of prepaid has forced service providers to rethink their strategy and attitude towards the prepaid segment and to treat it as “class A” segment. In addition, customers’ demand for a better customer experience, access to a variety of next generation services and the emergence of high-end smartphones, are serving as additional catalysts to this change
This shift in attitude is seen in four main categories: handsets, service mix, pricing schemes and business models.
From basic handsets to smartphones
A variety of service providers today augment the selection of devices offered to prepaid customers. While in the past prepaid subscribers were only exposed to a limited set of basic devices, today they can choose between a handful of high-end devices and smart phones.
Maxis in Malaysia, under their Hotlink prepaid