According to a GSMA Wireless Intelligence report just published, prepaid mobile has peaked. The proportion of mobile customers opting for prepaid plans is forecast to decline as postpaid becomes more popular worldwide, except in the Americas.
This does seem to tally with the facts on the ground as we in Idiro experience them – our mobile operator customers worldwide are finding that their consumer users are switching in larger number from prepaid plans to postpaid.
However, extrapolating this to a long-term trend is not so obvious.
From when Portuguese operator TMN gave us the world’s first real prepaid mobile phone service until the advent of smartphones, the choice of prepaid vs. postpaid plans was, in the developed world, linked to the consumer’s attitude to debt and her ability to get credit. I wrote a thesis (download) on the subject for my MA in marketing back in 1999.
Nowadays, everyone wants a smartphone and a data plan. (Idiro is still reporting high viral contagion of smartphone purchase among consumers.) And smartphones are expensive – often beyond the reach of the younger consumer. In countries where postpaid handsets are heavily subsidised, postpaid plans offer a way for the less well off consumer to get her hands on a new smartphone, and that seems to be driving the swing to postpaid plans in OECD countries.
But there are problems. Some mobile operators privately report high bad debt rates among new smartphone customers – and attempts by telcos such as T-Mobile USA to unbundle the phone subsidy have run into problems. There are masses of lower-cost smartphones in the pipeline – but it remains to be seen whether these will be cool enough for the consumer in the OECD or cheap enough to be affordable without a subsidy in less advanced markets.
Time will tell whether the postpaid mobile continues to grow at this pace. In my own view the answer is linked to the price of smartphones, the growth of banking and credit checking services in the developing world, and above all to the global economy and its ability to create wealth for consumers.
(A version of this post also appears on Idiro Technologies’ website.)