May 18, 2010
Initially characterized as a solution for low-income or poor customers, prepaid has enjoyed resounding success in both developed and developing economies. Internet services are an obvious target for prepaid mobile operators, but there is limited uniformity in prepaid operator mobile broadband pricing. Operators use a smorgasbord of approaches, from prepaid bundles to late-night browsing packages, as explained in Pyramid Research's report, Prepaid Mobile Services: Using New Business Models to Boost Profits.
However, there are two common principles: flexibility (with various packages based on usage volumes) and price competitiveness.
Here are some of our observations on mobile broadband pricing:
The dominance of prepaid: As the success of mobile voice services has made plain, emerging markets are prepaid markets. In turn, most services have to be prepaid-ready if they are to stand a chance of success. Two-thirds of the 3G operators we examined offered prepaid packages, with airtime sold in downloadable bundles ranging from 1MB to as much as 10GB. Other operators, such as Vodacom Tanzania or Uganda’s UCOM, have begun with a focus on the postpaid business segment. The main benefit of a postpaid package from an end-user standpoint appears to be the subsidized modem. In many cases, postpaid bundles are priced around the same level as prepaid packages.
Mobile broadband is largely positioned as an alternative to existing broadband solutions. Few players refer to mobile broadband as “Internet everywhere.” Rather, the emphasis appears to be on speed and convenience, with mobility as a bonus.
In most markets, mobile broadband is the cheapest broadband offering available. In Kenya, Safaricom’s HSPA packages are up to five times cheaper than ADSL for similar speeds. In South Africa, HSPA is up to 50% cheaper than 384Kbps ADSL. Only with speeds higher than 512Kbps or 1Mbps does the ADSL offer become more competitive relative to mobile broadband. Such higher speeds tend to be unavailable, and when they are available, they are too expensive for all but large businesses.
If they navigate correctly, mobile operators can bring to broadband the same brand of scale and marketing inventiveness they brought to basic voice services. In this sense, and as technology evolves, Internet service provision has become a natural step in the evolutionary path of the mobile operator.
— Guy Zibi, Head of Consulting
Prepaid Mobile Services: Using New Business Models to Boost Profits
Research Report published March 2010
Prepaid Mobile Services examines the success of prepaid operators in developing markets. It identifies the characteristics of successful prepaid players and suggests a number of core drivers for their profitability. The report makes a number of observations on the impact of ARPS on profitability in a competitive prepaid market context as well as on the core strategies successful prepaid operators rely on to boost revenue.
Mobile Operator KPI Forecasts
Forecasts published quarterly
Our Mobile Operator Key Performance Indicators Forecast products provide a complete picture of wireline voice and data communications in 84 markets. The Excel output includes five years of historical data and five years of market projections for metrics such as subscription totals, market shares, net and gross additions, prepaid and postpaid subscriptions, business subscriptions, data ARPS, aggregate ARPS, prepaid and postpaid MOU, churn and total service revenue — all broken down for the mobile operators in the respective markets. Data from these Forecasts is available online for subscribers to our DataTracker service.
Mobile Data Forecasts
Forecasts published quarterly
Our Mobile Data Forecast products provide complete pictures of demand trends 85 markets. The Excel output includes five years of historical data and five years of market projections for metrics such as GDP, mobile penetration, subscriptions (by operator, type of package, technology), ARPS and total mobile service revenue (data and voice). The Forecasts are based on extensive field research and use a consistent methodology across all markets, aiming to capture the total spending, from an end-user perspective, on mobile communication services in each market. Data from these Forecasts is available online for subscribers to our DataTracker service.