The Journey From Pre- to Post-Paid: Lessons From Emerging Economies

It is becoming clear that introducing mobile infrastructure to emerging economies is having a massive impact. In Africa, for instance, for every 10% increase in mobile ownership, GDP increases by roughly 1% – this according to Bill Clinton in 2012. Closely linked to the growth of mobile is the introduction of mobile money transfers in countries where bank accounts and credit cards are scarce. This too has transformed people’s lives and given them a platform from which to create wealth.

This growth was being driven by phones that are not particularly smart and are almost all pre-paid.

There is, however, something happening as a result of this initial boost which is every bit as important. The rise of mobile phone usage, and with it money transfers and the access to a huge range of services, is creating a mature market very quickly. The rise of M-Pesa in Kenya, and increasingly other markets, is not only feeding the overall health of the economy and financial systems, it is fueling the growth of bank accounts and credit card ownership. As the basic service drives take up, once customers see the potential, they then quickly take the next step.

The same is true of telecoms itself. The initial phase is for almost ubiquitous pre-paid accounts. Once the benefits of being connected are proven, then there is a migration to post-paid accounts. In emerging economies, the flexibility provided by real-time charging can migrate to post-paid accounts too.

It is also true that real-time control is most popular in countries where money is tight. The threat of Bill Shock, for instance, is bad enough in a wealthy country but unthinkable in one where customers need to count every cent and every phone call. The ability to give customers complete and transparent control over their bill, to alert them when limits are near, and to offer them special, relevant deals, is even more compelling in some emerging markets than in mature ones.

Innovation is happening in emerging markets, particularly where the post-paid market is growing. The potential is even greater when you consider the impact that low cost smartphones are having. There are many examples which demonstrate how operators in India and across south-east Asia are transforming ‘data’ into value. Free access to social media for a period of time, for a few cents, instead of it being part of some nebulous ‘data’ bundle is being offered by Digi in Malaysia and Reliance in India is offering similar deals.

As this maturity continues, the innovation will also continue. Shared data plans, pre- and post-paid convergence and real-time interaction directly via the device will become commonplace. In mature markets, where there is an acknowledged need for real-time to control finances, prevent Bill Shock and enhance the customer experience, there is little innovation. In many cases, a ‘real-time’ data roaming offer, for example, will be made by SMS, hardly a real-time interaction. In some emerging countries, however, the value of a completely personal communication with the customer, via the device, is becoming more widespread. Once the value of this communication outweighs the competition on price alone, innovation will increase dramatically.

Ultimately the term ‘data’ will all but disappear. As operators realize the return on their real-time investment is paying off in far greater ways than they thought when justifying it on a cost savings basis, real innovation will emerge. With it will come value and personalization. The way will be led by operators in emerging economies, working with customers who are eager for the benefits of new technology and who are happy to work with – and trust – their service providers.

Operators in ‘mature’ markets would be wise to watch and learn from an increasing number of examples from emerging markets.

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