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Artículo De Investigación: “10 Mega-trends on prepaid markets”, conclue !ue:

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10 Mega-trends on prepaid markets –Mobile Operators around the world arefacing huge challenges

Even though by far the largest part of many mobile operators’customer bases are today using prepaid products the prepaidmarket has hardly developed strategically since the launch of thevery first prepaid products many years ago!

When we examine the prepaid market, there is little doubt that many

operators are seeing their prepaid business case develop negatively, andthat what was once good business is developing into a less attractivebusiness area, with operators in many countries fighting to movecustomers away from prepaid accounts and over to various types ofpostpaid products.

At Strand Consult we have spent almost 2 man years researching theprepaid market and we have identified ! "ega#trends within theprepaid area that almost all mobile operators will need to address, ifthey want to avoid seeing the negative trends on the prepaid marketcontinue. $he ! "ega#trends are%

. &ecreasing traffic prices # outgoing traffic and terminated traffic2. 'nexpensive or free on net traffic(. Cheap international traffic). Cheap S"S packages with huge numbers of S"S

*. +repaid mobile broadband. 'ncreasing churn-. &istribution fraud # the race to increase the number of S'" cards isresulting in many S'" cards never being activated, or alternatively beingrecharged and used more than once.. &ecreasing top up prices # the use of electronic top up has reducedtop up costs in many countries/. $he increasing use of the 'nternet for distribution # online S'" salesand topping up!. "ulti S'" problems. An increasing number of customers have two,three or more S'" cards and use them depending on who and0or whenthey call.

"ost operators recognise the above trends. 'n reality these trends areresulting in the margins on prepaid products decreasing over time.

'n some countries the conse1uences are so large and competition is sofierce, that operators are experiencing increasing SAC and decreasingA+3 # and a churn rate that is simply exploding. A mobile penetrationof over 2!4 is not a sign of a healthy market, but a sign that anincreasing number of customers are choosing to use multiple S'" cards.

Around the world there are now operators that are seeing this segmentof their business # that once was a cash cow # developing into abusiness that in many areas is becoming a nightmare. $he pricedifference between prepaid and postpaid products is marginal, while atthe same time an average prepaid customer has a significantly lowerA+3 compared to postpaid customers.

As penetration increases and the battle moves from being a battle overnew customers, to a battle over retaining existing customers, it is mostoften the pricing parameter that is used to compete over which operatora customer chooses for their telephony. And we are increasingly seeing

that customers are choosing to have multiple S'" cards from variousoperators, basing their choice of S'" card on who they call, when theycall and why they are calling. All customers are interested in is access to

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cheap traffic, without taking into consideration any impact this has onoperators.

"ow can #trand $onsult help you optimise your prepaid businesscase%We have spent the necessary time to analyse and understand thismarket and have had a close dialogue with many operators around theworld to collect knowledge, analyses and experiences from the global

prepaid market.5ne of our teams has spent two man years examining the prepaidmarket and has developed a number of concepts that can help turn thenegative trends that many operators are experiencing today.

We know that knowledge is the road to success and the operator withthe most knowledge and a structured approach to their prepaid strategy,will find it far easier to be successful on this market.

5ur analyses show that many operators are currently using a great dealof their prepaid market resources on short#term solutions, solutions thatare for example focused on matching competitor6s prices. 7ut thisbehaviour is very similar to a spiral of death, that will slowly but surelyresult in an operator8s prepaid business case developing negatively.

We therefore recommend our customers to purchase a customised

Strand Consult workshop, where we together examine the prepaidmarket, how it has developed and how it will develop in the future. Wecan deliver a combination of knowledge, inspiration and a number ofcreative suggestions for concepts that our customers can immediatelyimplement.

Mo(ile prepaid p"one services )*00*+Yi-Bing Lin Nat. Chiao Tung Univ., Hsinchu, TaiwanMing-Feng Chang ; Herman Chung-Hwa Rao

uring the !ast "ew #ears, the mo$i%e !re!ai& service has $een growing e'!onentia%%# a%%over the wor%&. Four a!!roaches have $een !ro!ose& to !rovi&e mo$i%e !re!ai& service.(e &escri$e these a!!roaches an& com!are their strengths an& wea)nesses. *urana%#sis in&icates that the han&set $ase& a!!roach is a %ow-cost, high-ris) so%ution. Thewire%ess inte%%igent networ) a!!roach is a high-cost, %ow-ris) so%ution. The service no&ea!!roach is a +uic) so%ution, which a%%ows "ast &e!%o#ment with %imite& ca!acit#. The hot

$i%%ing a!!roach is an average so%ution that cannot !rovi&e rea%-time rating

Why prepaid mobile plans are gaining

popularity in the US (2004)

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http://ieeexplore.ieee.org/search/searchresult.jsp?searchWithin=%22Authors%22:.QT.Yi-Bing%20Lin.QT.&newsearch=truehttp://ieeexplore.ieee.org/search/searchresult.jsp?searchWithin=%22Authors%22:.QT.Yi-Bing%20Lin.QT.&newsearch=truehttp://ieeexplore.ieee.org/search/searchresult.jsp?searchWithin=%22Authors%22:.QT.Ming-Feng%20Chang.QT.&newsearch=truehttp://ieeexplore.ieee.org/search/searchresult.jsp?searchWithin=%22Authors%22:.QT.Herman%20Chung-Hwa%20Rao.QT.&newsearch=truehttp://ieeexplore.ieee.org/search/searchresult.jsp?searchWithin=%22Authors%22:.QT.Yi-Bing%20Lin.QT.&newsearch=truehttp://ieeexplore.ieee.org/search/searchresult.jsp?searchWithin=%22Authors%22:.QT.Ming-Feng%20Chang.QT.&newsearch=truehttp://ieeexplore.ieee.org/search/searchresult.jsp?searchWithin=%22Authors%22:.QT.Herman%20Chung-Hwa%20Rao.QT.&newsearch=true

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The prepaid market is growing fast

Earlier in this series, we’ve disussed some o! Sprint’s (S) initiatives to

gain postpaid subsribers" #ut prepaid plans have emerged as a popular

option among U"S" subsribers, as they’re loo$ing to ome away !rom

the e%pensive and lengthy ontrats that aompany subsidi&ed

smartphones with postpaid plans"

'ording to a report !rom * and as the hart below shows, the prepaid

unit share o! smartphone sales inreased !rom 2+ in +-+2 to .2 in

+-+." /oo$ing at this mar$et’s potential, we see that all maor teleom

providers in the U"S" have bee!ed up their prepaid o1erings" /et’s e%plore

this below"

U.S. telecom players oering a number of prepaid plans

Sprint has a number o! prepaid o1erings" raditionally, it sold prepaid

plans under the brand names 3irgin obile and #oost obile" #ut, earlier

this year, it introdued the Sprint repaid plan, whih replaed its Sprint

's 5ou 6o prepaid o1ering" Sprint repaid servie is available on

smartphones suh as 'pple’s (''/) ihone 4S and Samsung’s (SS/7)S." hese plans provides users a hoie o! di1erent servie levels

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at di1erent prie points" 7or e%ample, one o! the plans under Sprint

repaid gives you unlimited tal$ and te%t with + 6# o! data !or 8.9 per

month"

': () is also beoming serious in this mar$et" ;t aobile ( US) also

a