Prepaid mobile broadband - Cheaper but at slower speeds

[prnewswire] Initially characterized as a solution for low-income 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, as explained in Pyramid Research's report, Prepaid Mobile Services: Using New Business Models to Boost Profits.

Analyst-at-Large Guy Zibi's recent analysis on the prepaid mobile services market is featured in this new report and is continued in his most recent Pyramid Point blog, "Selling Prepaid Mobile Broadband: The Next Phase." "Operators use a smorgasbord of approaches, from prepaid bundles to late-night browsing packages," says Zibi, "However, there are two common principles: flexibility (with various packages based on usage volumes) and price competitiveness."

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.

Two Common Principles Emerge in Prepaid Mobile Broadband Pricing, Pyramid Finds
see also Pyramid report