John Linton
It may well be that I am simply mentally exhausted and physically even more run down than I have ever been but it is taking me a lot longer than usual to do some pretty basic 'administrative' things at the moment. I suppose many people feel this way as a long overdue vacation approaches but it seems a little more noticeable to me this year. I'm having a great deal of trouble understanding why I have not been able to work out what is going to happen in the pre-paid mobile data marketplace and what sort of people/marketplaces are going to prefer a prepaid offering to a post paid offering and is there actually any difference.
The ABS gives some information but as it's derived from input from the carriers it is not all that useful. I read this article earlier this morning:
http://blogs.wsj.com/digits/2009/08/10/virgin-mobile-its-not-just-the-economy-driving-prepaid/?mod=rss_WSJBlog?mod=
and while it applies to mobile telephony and is about the US market it gave some sort of views that seemed as contradictory as all of the other views I have read and listened to. On the one hand I understand that some sections of the market for mobile telephony (parents buying mobile phones for children and wanting to protect themselves from huge bills I suppose is the prime example) but I can't see ANY such rationale for mobile data. I think this statement from the article sums up what is lost (at least by the vendor) when offering pre-paid:
"Obviously postpaid offers annuity streams. It offers the ability to discount iconic handsets and put smart phones into people’s hands"
and I have watched for twenty years while mobile carriers have made the give away of expensive handsets and long contracts of rip off call charges the cornerstone of consumer mobile services (and not to pull punches - the cornerstone of business mobile services). So why are these same carriers pushing pre-paid mobile telephone and now pre-paid data services so hard in some areas when there are virtually no benefits, if any at all, that I can see for them?
Exetel's first HSPA offerings were based on a 'no contract/pay for your own modem' set of plans and they still account for over 70% of our sales. If there is no contract what's the value of a "pre-Paid"? None that I can see other than various permutations of pricing and 'special conditions' designed to deceive the customer and hide the true costs of the service being offered - a mirror image of the tried and true mobile telephony marketing deceptions. By removing any contract period Exetel, and others that do it, recognise that the ultra bargain hungers who therefore won't get a 'free' modem will choose another carrier/plan but really the mobile data product is not aimed at the cheapskate buyer (although it may very well develop into that if download charges reduce in the not so distant future).
So Vodafone in the USA has delivered a better financial result while reducing the number of overall customers and increasing the number of pre-paid customers. Bad for market share but good for future viability because it seems to me to be a pitiful amount of money to have made in any case.($US17.2 million on $US307.6 million though significantly better than it made in the previous year which was truly woeful). It seems obvious if you stop giving away handsets you will make more money but that has been the case since the inception of that peculiar practice so it should elicit the comments that it did. This is cited as the reason Sprint bought the business from Vodafone - because of the contribution of the pre-paid offerings. Presumably Vodafone didn't have the same view and was happy to sell.
Exetel have put in place some pre-paid HSPA plans and they have gone exactly as I predicted - they have generated almost no interest. I can't see a reason why anyone would buy them and that seems to be the view of the people who come across them who may be in the market for wireless data services. The only potential buyer for a prepaid mobile data service that I can see is the business person who travels a day or so a month and wants internet access for an hour or so each month and is too cheap to buy a $5.00 per month plan with a payu very low cost per megabyte used.
What have I missed or what has my poor tired brain been unable to grasp?