Prepaid mobile telephony has become particularly
popular in Europe during the last few years due to a
number of practical incentives. For one, it is
generally thought to be a more affordable service
than contract mobile phones, because prepaid
packages do not charge a rental fee the subscriber
has to pay every month (they do, however, tend to
charge a oneoff connection fee for the service). In
addition, prepaid subscribers do not need to have a
contract, and they are charged on a payasyougo
basis except in some countries – including
Switzerland, Thailand, and Malaysia – where the law
(according to news reports from the BBC)
stipulates prepaid subscribers need to be registered
in an attempt to boost national security.
On the other hand, postpaid subscribers are
differentiated from prepaid ones in the fact that
they are “locked” into a contract of a given
duration. This varies from country to country and
from operator to operator. According to
TelecomWeb’s sister division Tarifica,
in the U.K., the minimum contract period has been 12
months for some time. At the end of a contract, a
subscriber would typically research what is being
offered by the operator, and he or she would either
opt for a handset upgrade or to ask for a lower
rental price or an additional inclusive allowance
(this would also constitute renewal of the contract
for a further 12 months). Acquiring a new subscriber
costs the operator more than retaining one. With
fierce price competition in all European markets and
the subscriber base reaching saturation, operators
need to help ensure that they keep customers longer.
Therefore, operators are gradually giving
incentives to customers that encourage them to
commit to longerterm contracts. The attractive
offers that correspond to a longer customer
commitment have been designed to increase loyalty
amongst subscribers while at the same time rewarding
them for renewing their contracts for longer
periods. Here’s what some European carriers are
doing:
>>In The U.K.:
Orange: Orange offers a reduced
rental of 10 percent for those who commit to a
24month contract (offering as much as a 25percent
discount on the line rental, starting with 10
percent in the first year).
Vodafone: Vodafone encourages
subscribers to move to 18month contracts instead of
12month contracts by offering the ‘Stop the Clock’
feature (for calls lasting less than one hour, only
the first three minutes will be charged).
O2: O2 offers a 50percent extra
monthly allowance for life when customers buy the
18month contract. For example, the O2 200 price
plan offers an extra 100 minutes and 100 SMS free
every month (the offer applying to certain price
plans only).
Virgin Mobile: Virgin Mobile
offers a lower monthly rental charge when committing
to a 18month contract. For example, Plan 400
inclusive on a 12month contract is a bit more
expensive than if taken on a 18month contract.
>>In France:
SFR: SFR offers a minimum
contract period of 12 months, but new subscribers
can save an additional 10 percent on their monthly
rental if they subscribe for 24 months (the Avantage
Fidelité option). SFR Intégral Absolu and SFR
Interne Absolu subscribers can receive a further
15percent discount if they opt for a 36month
contract.
Bouygues Telecom: Bouygues
Telecom offers a lower monthly rental if subscribers
commit to a 24month contract. For example, Forfait
Reference 60 minutes inclusive offers the monthly
rental at $26 (U.S.), as opposed to $29 (U.S.) per
month, which is the price for subscribers who commit
to a 12month contract only (or a 10percent savings
on the rental. This type of savings is offered
across the majority of Bouygues Telecom plans).
>>In Ireland:
O2: Existing customers receive
25percent more minutes every month when purchasing
a new 18month contract.
Going forward in Europe, Tarifica generally is
seeing a move to longerterm contracts and greater
rewards for customers. The only drawback from the
subscriber’s point of view is the fact that he or
she is not eligible for a handset upgrade before a
contract has expired. With handsets becoming more
elaborate and technologically advanced, many
subscribers choose an operator and a price plan on
the basis of the actual phones on offer. It is,
thus, important for certain subscribers to renew
their mobile handset regularly in order to keep up
with the latest technological developments. In such
a scenario, it remains to be seen if customers are
willing to commit to longerterm contracts at the
expense of keeping existing handsets longer.