Poor Pitiful Prepaid

Every city has them. Those celebrities of late-night commercial TV who hawk loans and insurance programs for people with poor credit. Here in Kansas City, we have Rodney D. Young. He tells viewers that they can get insurance no matter what sins lie in their pasts. Having good credit myself, I seldom pay much attention to those commercials. However, when you think about it, those types of companies are paying a high price for a relatively small market as well as leaving the impression of questionable repute.

I wonder if the wireless industry is settling for a similarly niched market with its prepaid services for airtime. The familiar industry tagline associated with prepaid has crossed most of our lips at least once -- the service for the credit-challenged. Sure, it offers carriers an alternative for getting the credit-unworthy on their networks. However, from a consumer point of view, there is somewhat of a negative stigma associated with prepaid, even for the actual subscribers. Perhaps that is why many carriers don't actively promote it as an option, merely saving it as a last-ditch effort for those customers who fail their credit checks.

Remarkably, no carrier is actively promoting prepaid or its potential extensions for its positive attributes. Although some carriers are beginning to appreciate Generation Xers as a potential market, the marketing approach generally has been geared toward the parents who want their children to have wireless communications but also want to prevent unexpectedly outrageous wireless phone bills.

I suggest that carriers consider using the prepaid engine to develop the gift concept. The beauty of this concept is that the target market is not limited to wireless subscribers. Virtually anyone, subscribers or not, could pre-purchase airtime.

For example, do you need a gift for one of your hard-to-buy-for friends who already has wireless? Consumers could buy cards indicating free airtime increments. These would make great gifts for virtually any holiday, including Christmas, Valentine's Day, even Mother's Day and Father's Day. Or perhaps carriers could appeal to parents of children who are on the go and never call. How about a gift of 50 or 100 minutes of airtime?

As a further extension of this concept, carriers could even use it for themselves. Carriers could send out airtime cards as a way of thanking subscribers for doing business with them. Perhaps they could "prepay" for 15 minutes of credited time for current subscribers' birthdays or their service anniversaries.

However, there are two tricky parts to this concept. First, it has to be easy for consumers to get the credited minutes. I always have thought that certificates for free airtime would make terrific Christmas stocking stuffers for my sisters. However, they live in four different cities in the United States. Even if such a program were universally available, I still would have to find out which carrier each of them subscribes to. Although I think gifts of airtime would be fabulous, it just isn't worth the trouble to me as a consumer.

If carriers launched a universal program that would be honored across carriers, imagine the potential popularity. People such as myself could buy increments of airtime for friends and family.

The second challenge lies in provisioning for this type of service. Carriers need to have a resilient enough billing system to credit this "gift" airtime in a timely fashion.

The Yankee Group projects that prepaid in its current design could account for some $2.2 billion in total revenue by the year 2002. However, imagine the possibilities if carriers opened it up to more positive approaches. It potentially could be $22 billion. Prepaid can continue chugging along as a niche, Rodney D. Young type of program or become something more credit-worthy.