GPRS Elixir

Tough competition forces successful carriers to personalize services so they can stand out while also offering customers services they want. This competition in the wireless industry has led to the development of different payment schemes. Some wireless subscribers want a post-paid account where they receive a bill every month. Others want to keep minute-by-minute tabs on how much they are spending. For these customers, a prepaid scheme makes the most sense.

Even though each has remained independent until now, these two schemes are moving closer together. Customers may soon get both on a single account. For example, customers could have post-paid voice service and a prepaid data service.

This strategy is attractive for customers who want to explore the wireless data services, yet keep tabs on how much it's costing. For example, they can buy goods online, download data and play games, knowing that they won't rack up a huge bill. Family accounts will find this useful as well. For example, Dad can have his normal post-paid voice account for business and leisure. Yet, he could use his prepaid account to transfer funds to his children's prepaid accounts.

Enterprise customers also will be interested in this dual approach. They could post-pay for voice services, but only prepay a budgeted amount for each employee's wireless data account.

This strategy allows prepaid customers to get the same benefits as their post-paid counterparts. For example, prepaid customers can receive discounts for family and friends or share usage bundles based on megabytes, minutes or credits.

The introduction of prepaid schemes has been the cue for the huge expansion in subscriber numbers. Customers like the ability to control costs. They also don't have to be tied to long-term contracts.

Other bonuses include reduced churn and increased ARPU.

According to industry statistics, prepaid will account for 46% of all wireless revenues by 2003. Up to 40% of these future prepaid revenues will come from next-generation, value-added services.

Carriers can't rely on a one-size-fits-all approach when it comes to prepaid packages. There are significant differences between world market that they need to heed. In Asia, for example, there has been a dramatic takeup rate for prepaid in the Philippines, Malaysia and Indonesia. On the other hand, Japan and Korea have seen minimal growth. China is the prepaid star of the region. It added more than 11 million users in a single year.

Meanwhile, Europe has seen dramatic growth in prepaid customers. In contrast, prepaid is virtually non-existent in the United States.

GPRS & prepaid

Carriers worldwide are operating GPRS networks or are about to launch them.

At first, most consumers of GPRS services will be from the corporate sector, accessing e-mail, intranet, Internet and other applications using PDAs and laptop PCs. Yet, carriers can't afford to concentrate too much on business users, selling it as part of their normal post-paid packages. By not providing it under the prepaid schemes ignores a huge untapped consumer market. Personal mobile communication services such as rich call, WAP, enhanced SMS, multimedia messaging, instant messaging, m-commerce and location-based services must be made available to the prepaid segment to maximize profits.

For example, teens and young adults often lead the way in adopting new trends and technologies. Think of them using prepaid vouchers for playing on-line games with their friends. Think how quickly music changes, how many movies are made every year. Think of fashions and trends and how young people always want the latest of everything.

These two customer categories drove up usage for voice and short messaging service explosions by chatting with their friends using prepaid. With games, music and video available over GPRS prepaid, they can do the same for data.

One thing is certain: Carriers will ignore prepaid subscribers at their own peril.

---

Walters is a Nokia Networks' systems marketing manager.