Prepaid Mobile Internet Services

Jim Machi : Industry Insight
Jim Machi

Prepaid Mobile Internet Services

I will be going to Singapore in a few weeks for the Telco Strategies 2011 conference, and I always like going to Asia since the mobile market is different than the US market.  For instance, one difference that’s important to understand is how people pay for the usage of their phones.  In the US, people predominately pay by monthly fee subscription.  And outside of Korea and Japan in APAC, people predominately pay in a prepaid mode.  In fact, according to Infonetics, 70% of the worldwide mobile market pays prepaid. And I know from talking to Indian service providers that the Indian market is definitely north of 90% and probably more like 95% in terms of prepaid.  Contrast that where in North America, prepaid is less than 20%. 

This is important since it is one of the shapers of the types of mobile applications people use, and the uses cases for them.  The user environment is clearly another shaper of the mobile applications since if you’re taking mass transit and waiting around a lot, you want something to do and so since you have your mobile phone with you, you can use it for entertainment.  In the US, many of us drive cars to work so our phone usage historically has been more pedestrian.

As an example of an application difference, in the US, you will get a mobile voice mailbox within your monthly fee and we all use that.  In Asia, where the subscribers are predominantly prepaid, you don’t, so there is more SMS, and voice SMS might be what you use if you want to leave a voice message – i.e. you send an SMS but it’s a “voice” package delivery instead of text.  And you can do this with video too -  in fact, we see our partners in Asia offering video SMS.

That’s with voice, and it’s not unexpected then that we’re now seeing mobile providers providing prepaid internet access by the minute in APAC.  For the same reasons indicated above, it was inevitable that mobile broadband access would follow the pricing for voice.  You simply go “fill up” your prepaid access card when you can or want to. Bloomberg also has an excellent article about this.

While this is normal practice in Asia as I said, I did look into this in the US and there are niche use cases for this where you can also get internet by the minute in the United States, for 1 cent per minute, but it’s only dial-up. WiFi is 12 cents by the minute which isn’t bad, but you need to use their network and I checked New Jersey, where I live, and there is only one location.  So for this to really work, they would need more locations.  But if indeed it’s only a niche, then what’s the point?  There is also a website I found called that’s all about prepaid internet services by the minute and you can see they cater to vacationers who might need access just to check in. This is probably a better business model.

At any rate, I’m looking forward to attending this conference because I always learn from them.

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