Business Rationale Behind 12 Month Prepaid Data Offers

Previously, I reported that Vodafone UK is the third operator I know that has now started to offer a prepaid package for wireless broadband access that includes a gigabyte of traffic and is valid up to 12 months. When only looking at the 12 months, it would seem that this is rather a bad deal for the network operator or in other words, not a lot of revenue opportunity. However, I think quite the contrary is the case.

Let's take Austria for example: If you take a post paid contract for wireless Internet access from mobile network operator Three for example, 3 gigabytes per month are now available for 9 euros. Compared to the 15 to 20 euros others like A1 and Yesss charge for the one gigabyte per 12 months, is only a fraction. So the 12 month offers are attractive for infrequent users and travelers who would otherwise not spend anything at all, as even the 9 euros is too much for them. So it is better to get that 15 to 20 euros revenue than not getting it at all. And by doing so, your margin is much higher compared to the contract offers.

I guess a lot of people taking the 12 month prepaid offer will not fully use the gigabyte so the bottom line is even better. And for those that do, they are likely to buy a top-up, thus increasing the revenue once again. A win-win situation in any case.

2 thoughts on “Business Rationale Behind 12 Month Prepaid Data Offers”

  1. I agree. I know one person who stays on dial-up as their monthly data usage is very light and not worth the $30 dollars per month for DSL or WBB.
    If the Australian carriers offered 12 month data expiry, this customer would buy the prepaid wireless and I’d bet any money their monthly data usage would increase with the higher bandwidth available compared to dialup and hence the top-up would occur more often.
    As it is, the 30 day expiry on data usage is a big turn off for the low volume users.

  2. I would love to see a US carrier offer a prepaid data service.

    There are cases where one carrier’s 3G signal (or even 2.5G signal now that I think about it) is not available in a given area. As a frequent domestic traveler I would consider ponying up a few dollars to make use of another carrier’s data connectivity for a short while.

    I wonder what the new Gobi technology from Qualcomm will mean to this market with regards to the ability to morph a device from CDMA to GSM via software. (At least this is important in the USA. Not sure about the rest of the world which is GSM).

    Sign me up in any event.

Comments are closed.