The Prepaid Press - July 15, 2008 - (Page 14) PREPAID WIRELESS July 15 · 2008 - 14 The Changing Face of Prepaid Wireless Staff Report The prepaid wireless market, always in turmoil, has become even more turbulent with the MVNO mergers and demises, new handsets and an increasing competition between prepaid and postpaid contractual plans for customers. The response to these developments reveals some clues as to the future of prepaid wireless. At least for the time being. Let’s take a look at three strategies for marketing prepaid wireless services in this environment. you-can-eat mobile service. T-Mobile came to the party, and upped the ante by throwing in unlimited text and instant messaging. Some experts have suggested that this trend towards flat rate services may portend a war of attrition that could lead to the collapse of the voice revenue market of wireless in general. There is some justification for this concern if you look back at the way long distance markets moved in the US twenty years ago. Nothing collapsed, but unit prices dropped drastically. Corporate consolidations ensued, as those who built business cases on high prices and generous margins found they could not survive. The situation in the wireless arena is a bit different today than long distance was 20 years ago, so the flat rate scenario from the long distance world may not repeat in wireless. Studies show that consumers who use more than 1,500 minutes per month are the main target for unlimited postpaid plans, so when MNOs began offering flat rate services, it was really just a way for carriers to retain their best customers. Not to be outdone, the prepaid crowd began offering unlimited prepaid wireless service, the first being Airlink’s Powerlink at $59 a month. The plan, announced in December 2007, did not include long distance, however. Earlier this year, AT&T and Verizon began offering unlimited prepaid plans for $99 per month. Recently, Virgin Mobile USA announced that they would offer customers an unlimited monthly plan for $79. Boost Mobile, a Sprint division, recently announced a $1 a day unlimited nights and weekend plan, with 10¢ daytime minutes. Expect to see other price cutting on flat rate services. As long as the average prepaid wireless bill is below the unlimited rates, not many customers are likely to go for it. But, we shall see as usage goes up, the price of unlimited plans goes down. Shrinking MVNOs, New Plans, New Phones Drive Strategies the desirable phones available, including the iPhone. Perhaps the market changed, or maybe nobody ever bothered to ask users if they were willing to pay for higher function handsets. Today, there is a virtual smorgasbord of choice handsets offered to prepaid users. For example, the Super Slice from Virgin Mobile, with Bluetooth, a 1.3 Megapixel camera, web browser, and even mobile IM and email. Virgin has other equally attractive handsets, like the Flat Rate In the distant past, there were two distinct, and separate, markets for wireless, traditional contractual, subsidized postpaid service, and noncontractual, non-, or minimally-, subsidized prepaid service. But then, a funny thing happened. As competition lowered unit prices, and started providing more consumer choices, prepaid began taking on some of the features of postpaid, like flat rate service. First, the Mobile Network Operators, starting with Verizon, followed in quick succession by AT&T and T-Mobile, began offering flat rate, all- As long as the average prepaid wireless bill is below the unlimited rates, not many customers are likely to go for it. Kyocera Super Sonic and has recently added a new handset from Samsung, the Slash. Slash has a VGA camera, Bluetooth, text and email, also. Also included on Slash are an integrated speakerphone, voice activated dialing, and Autotext for easy texting and email. Boost Mobile is targeting the youth market, and offers handsets with video recorders and MP3 players, like the popular Motorola MOTOKRZR phone, which has touch sensor music controls and GPS. Boost has a GPS enabled network, which is used for social networking and location based services. AT&T has said that prepaid plans may be available for the new 3G iPhone introduced on July 11. At press time, details were not available, but check the TPP website, www.prepaid-press.com, for details as they are announced. High Function Handsets In days past, when you bought a prepaid wireless handset, you got the bottom of the barrel - a nondescript, featureless, bare-bones instrument. Of course, the prepaid market was different then. Today, prepaid wireless handsets include most of WORLD CLASS CARD MANUFACTURER The cards we’ve produced have travelled worldwide. Let us produce and ship your cards wherever they have to go. NOW OFFERING A BIODEGRADABLE PLASTIC WE OFFER OUR CLIENTS Standard and high resolution (DOD) ink jet Secure scratch off (customizable label or slurry) LoCo and HiCo magnetic stripe Three track encoding Single and batch wrapping (customizable) Tipping Fulfillment Customized packaging Commercial printing August 19-21, Caesars Palace, Las Come Visit Us in Booth 304 at The Prepaid Press Expoas Veg Simplicity May Be The Key The plethora of prepaid wireless offerings, each seeking to differentiate itself from the others, has led to offers that are often confusing and difficult to understand. Between the unlimited plans, and the fixed price per minute plans, are an endless variety of complex, mind-bending plans. Whether these plans are designed to confuse, or are a sincere attempt to offer prepaid consumers an array of options, is unknown. What is certain is that many consumers find it difficult to understand prepaid offers. A typical prepaid wireless plan may be a chart showing a list of prices, like $19.99, $29.99, $39.99, and so on. Each price has a number of daytime minutes and a number of nights and weekend minutes that come with the plan. Then, there is a price for each additional minute. If this is not confusing enough, each plan also has a different expiration date associated with it, the higher prices getting a longer expiration. Even for very experienced prepaid wireless users, this can be daunting. For first time users, it can be overwhelming. “We said, ‘let’s make it very simple’,” said Jeff Kapner, Vice President of Marketing for Total Call International. “Ten cents a minute, all the time for domestic calls, and whatever the international rate is per minute for that country.” Total Call has a unique arrangement with Sprint, where international calls on the Total Call Mobile network complete over Total Call’s discounted international network. “Refill denominations are very simple,” added Kapner. “$10, $25 and $50, and they all expire at the same time. No daily fee, no monthly service fee. You pay for your airtime.” Kapner said that, especially with immigrant populations, this works in Total Call’s favor. “If I am a clerk in a store trying to sell a program to a customer, I have a limited amount of time,” he said. “The buying decision is made in the store, so it relies heavily on the salesperson in the store.” He said that customers asking for the best plan are attracted to a plan that is easy to understand. Turmoil Drives Strategy As we continue to see disruptions in the prepaid wireless market and MVNO turmoil, finding a successful strategy will be the key to success. Those who find the keys, will likely thrive. Those who don’t, may fall by the wayside. www.pentagon.ca 877-339-5995 ideas@pentagon.ca http://www.prepaid-press.com http://www.pentagon.ca http://www.pentagon.ca
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