As mobile voice services continue to mature, most service providers are finding slowing market growth, requiring that they implement new services to maintain revenue. Prepaid data services are one market segment that provides immediate revenue opportunities. While the ideal subscriber is on a monthly postpaid service, the reality is service providers need to find ways to add new subscribers. The prepaid market provides an opportunity to attract new subscribers and, eventually, transition them to postpaid services.
Traditionally, prepaid services have met the needs of the credit-challenged: those subscribers with either bad credit or, in the case of some young people, no credit rating at all. Research indicates the youth market presents the best opportunities for prepaid data services, particularly as its undersaturated by wireless, and shows the greatest appetite for wireless services. Research firm IDC recently reported overall consumer subscriber growth was expected to dwindle from 7.6 percent in 2003 to 0.3 percent by 2007; many U.S. carriers actively are pursuing youth and young adults as the next frontier for growth in wireless services. IDC also notes carriers will have to adopt unconventional business models and marketing approaches to capture this elusive market. And research from In- Stat/MDR shows carriers such as Verizon Wireless, AT&T Wireless and Cingular Wireless all have rolled out prepaid services specifically targeted at kids and young adults.
While the prepaid market once was considered a bad market because of its low average revenue per user, it is now a healthy market with attractive revenue growth because it offers a method of gaining access to otherwise inaccessible markets such as youth. Driven by the youth market, applications, primarily messaging such as multimedia messaging services (MMS), will provide revenue opportunities. In fact, In-Stat/MDR reports the worldwide market for MMS will experience a compound annual growth rate of 141 percent between 2002 and 2006, growing from about 30 million subscribers in 2003, to more than 265 million in 2006. Other fast-growing applications include Internet browsing; customization, such as ring tones and screen savers; and file downloads, such as pictures using camera phones.
Once prepaid customers are active, they can be converted to postpaid accounts, particularly youth who are in the process of generating credit histories and establishing their service preferences.
Prepaid service plans typically require that subscribers prepay for a period of time, or a quantity of service, such as x minutes. Service plans for prepaid data can be somewhat more flexible. In general, the service provider may not bill for the data transport, but will be able to create plans that provide for:
- Charging per message for MMS, plus
- Charging per item download and
- Charging a flat fee per month for browsing.
A CHANGE IN THINKING
To be successful in the prepaid data market, service providers must change they way they think as it relates to accounting for usage. Service providers must find alternatives to double charging as this model isnt acceptable to this market. Double charging refers to when users pay for access plus what they do with that access a common billing scenario in postpaid services. This is acceptable to subscribers who are concerned with not only the speed of the service, but also the quality of the data pipe and will pay a specific monthly service fee for guaranteed quality of service. In the case of prepaid services, especially for the teen market, subscribers are only interested in what they can do, not how its done.
Solutions to this quandary may include:
- Using multiple network access identifier credentials one set per application (for example. email@example.com for browsing, 6135 firstname.lastname@example.org for push-to-talk (PTT) and 6135 email@example.com for MMS). Different credentials make it easy to identify the user and the service. For example, the service is mms.carrier.com and the identity is 6135916655.
- Employing a post-processing method to take records of usage from an M MS and credit the volume of the messages in bytes back to the users account.
- Using a network sniffer to sniff and credit application usage (same as the post processing method but done in real time).
- Using a PDSN that is capable of counting some traffic but not others (for example, the PDSN understands that MMS is billed by the MMS server and so does not count bytes to and from the MMS server).
Telecommunications Industry Association Standard IS-835C published in 2003, governs prepaid data service standards and defines the ability for a Packet Data Serving Node (PDSN) or Home Agent (HA) to meter prepaid usage. In the IS-835 standards-based service model, the PDSN or HA has prepaid capabilities, and meters a subscribers session based on a quota supplied from a prepaid system. Once the quota is used up, the PDSN replenishes the quota by sending a request to the prepaid system via the home RADIUS server, which will either send another quota or send an access reject message. At this point, the subscriber is either disconnected or hotlined to a portal to top up the prepaid account.
Currently most deployments are applications based, such as browsing on a fixed per-day or monthly charge and MMS on a per-message charge. Standards-based solutions will provide a wider range of revenue- generating options such as volume-based usage. Although standards- based equipment wont be readily available until late 2004, prepaid data services can be deployed today with equipment that will conform to the standard as it becomes widely adopted. Service providers should make the move into prepaid data services now, in order to establish a strong foothold in the market, and realize immediate revenue from this growing market.