Prepaid on the rise (again?)

Dec 19, 2013

This can hardly be surprising to anyone with their ear to the ground and, anyway, probably chimes with operators’ own customer research. According to Reinhold M. Sigler, Managing Director of the prepaid service provider Peaches AG, which sponsored the exercise (health warning) the research conclusions were unambigluous: “Prepaid,” he claims, “is quite simply what customers want. Flexible and low-cost calls without having to think about traps in the contract.”

And it must be borne in mind that the research was conducted in Germany, home of some of the highest mobile prices in Europe. If there was ever a nation looking for a discount it has to be Germay. In France and the UK now, thanks to real competition, prices are much lower so perhaps the spur to prepaid is less.

Having said that many European users have been herded into postpaid contracts (because of the ‘free’ smartphone being dangled to attract them) only to discover that they’re probably paying far more than they expected to. Having to determine in advance how many ‘minutes’ they intend to use each month and then being charged at high rates for any overages must be one of the biggest annoyances, especially when most contracts don’t allow the user to roll over unused minutes - talk about win-win.

With the first wave of pre-paid it was somewhat, well, down-market. Many users must have felt like second-class digital citizens - buying prepaid credits was somewhat like being forced to have a coin operated electricity meter because your credit wasn’t good enough to pay by bill. Little wonder that operators found it relatively easy to convert the ‘pres’ to postpaid by making it look like the best and even most cost-effective option.

But today, of course, there’s no need to go to the local store to buy credits. For the last several years the smartphone has been able to provide its own pre-pay platform. Many users can just go online and pay in advance without worrying about a sudden and unexpected gouging from the operator and more and more (according to this research) it’s what they’re choosing to do.

So a little tip for Christmas mobile present buying. Consider pre-paid again and look at buying the phone outright or via hire-purchase. After all, it’s just like paying the bill in advance except you tend to feel more in control.

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