T-Mobile gives prepaid customers the 5G luxury

T-Mobile has become the first US telco to commit the 5G euphoria to its prepaid customers, alongside unlimited plans which will feature Amazon Prime and Google One.

Previously known as MetroPCS, the prepaid brand has been shortened to Metro, and is the first service to commit to 5G as a prepaid offering. Starting from $30 a month and heading up to $60, the various plans are data-centric, aiming to appeal to teenagers and millennials.

“When we talk about 5G for All, it’s not just nationwide 5G service but it’s all shades of T-Mobile, Magenta and Purple,” said Neville Ray, CTO at T-Mobile. “5G is going to be huge. It’ll transform the wireless experience. Metro by T-Mobile customers deserve access to the latest technology, and we’ll make sure they get it.”

The new offers will be available to customers as soon as 5G-capable phones hit the market in mid-2019, though that hasn’t stopped the Magenta Army from preaching the benefits today. Prepaid services are often viewed with an air of distaste, though committing to 5G services certainly adds to the blur between prepaid and postpaid.

The basic difference between prepaid and postpaid is simply the billing function, though postpaid are more attractive to the telcos due to the lower risk of churn. With this enforced loyalty, benefits have traditionally been directed towards this segment, i.e. subsidised devices or value-adds such as free subscriptions, though the landscape does seem to be shifting. Benefits are being offered irrelevant of whether a customer is prepaid or postpaid.

Customers of the top two tiers of these tariffs will receive a free Google One 100 GB cloud storage account, while those selecting the top-tier will also get an Amazon Prime subscription. The 5G commitment from T-Mobile US is just another example.

“I couldn’t be more proud of today’s launch and what it means for our customers and potential customers,” said Tom Keys, President, Metro by T-Mobile. “Truly nationwide and unlimited service on the most advanced LTE network and now with Amazon Prime and Google One. There’s not a better value in wireless. And with a commitment to bring 5G to life in 2019, we’re making it crystal clear: Metro by T-Mobile customers aren’t making a compromise. They’re refusing to make a compromise.”

Engaging via a different credit pathway

Telecoms.com periodically invites third parties to share their views on the industry’s most pressing issues. In this piece Jacquie Amacher, VP of Marketing at Juvo, argues that the critical relationship for a prepaid subscriber is with the company it buys its balance top-ups from.

Extending airtime credit to pre-paid customers has always been seen as something of an emergency service. But the latest thinking sees it instead as a means to a very different end.

If we take a typical pre-paid customer in an emerging market, the moment of truth for that customer, so to speak, is when they need to top-up. As a credit balance drops to near-zero, the customer heads to their usual agent or outlet to buy more airtime. As far as the operator is concerned, this is the time when, far too often, the moment of truth quickly becomes the moment of churn – because the power in the top-up process lies with the agent on the ground and not with the operator’s marketing and sales team.

In markets where more than 85 per cent of subscribers are pre-paid customers who need to top-up, that loss of power is a problem. In fact it leads to churn rates in emerging markets that touch 35 per cent per year as the agents push the consumer towards the network which is offering – that week – the best commission levels and incentives. These agent reward schemes often fluctuate from month to month as operators try to get an edge in the marketplace; but arguably they only serve to fuel churn.

To try to wrestle back control, and effectively put off the moment of churn, some operators use simple emergency lending to keep a customer connected for a limited period of time if their balance falls to zero. These loans are designed to get the customer through that period between the airtime credit running out and the funds becoming available to visit the agent. The thinking behind the emergency loan is simple – customers are less likely to swap SIMs and more likely to stay with a network that helped them in their time of need – no airtime credit and no money.

There’s another side to this though; the customer now has a debt to clear with the network, coupled with an interest charge to clear or fee to pay which immediately eats into their credit at top-up. What’s more, to limit the risk of the unsecured micro-loan and guard against a customer simply starting a new anonymous pre-pay agreement on a different network, the operators also use a variety of fairly restrictive emergency lending criteria. Typically these take into account the frequency and value of the top up as well as the tenure of the customer with the network. A long-term customer, with a good, frequent top-up history is a much safer bet than one who has just joined the network and carries no history. In fact many operators privately admit that as many as 90 per cent of their pre-paid base would not be considered eligible for emergency lending.

There are other flaws in the ways many emergency loans are currently offered. For example, often the offers are triggered by the time of the month, rather than the actual real-time credit balance. This makes some offers irrelevant and many others – given that the size of the credit extension is habitually set a very low level – almost worthless if the operator only targets those subscribers deemed to be a good risk.

Simply put, emergency micro-loans are an outdated approach that is neither dynamic, intelligent or personal; nor do the loans have a clearly defined strategic purpose – such as increasing customer engagement and opening a pathway to new services. They are simply a tool to put off the moment of truth rather than actually helping the operator to regain control. They are not even that efficient. The overly conservative nature of the program limits the addressable market, and therefore doesn’t make best use of a significant amount of actionable data sitting within the operator’s network.

Rather than generate revenue, we think the way micro-loans are typically managed today actually leaves significant operator revenue uncollected on the table. But with a different, properly integrated approach they can become a key part of a targeted operator solution that aims to combat churn, drive revenues, increase customer engagement, and create a pathway to financial inclusion for a huge number of undocumented pre-paid consumers.

Doing this effectively involves some key, game-changing principles:

  • Initiate direct contact via an operator branded app
  • Base the contact on real-time usage and behaviour data
  • Provide help from the first moment
  • Don’t always wait for the moment of truth – act early
  • Don’t charge interest on airtime loans

The idea is to trigger engagement right from the moment the SIM is activated. What’s more, right from that first moment, operators can apply tried and trusted programs from the retail world such as loyalty and reward programmes which will not be effective in building loyalty, they will also increase engagement and generate more customer data points. Simply by integrating the top-up process and credit extensions into a real-time app with a built-in loyalty and rewards program, operators are able to develop a direct relationship and achive a position of mutual trust with a customer who before was simply an anonymous number.

That early and often engagement is vital. Regardless of the subject of an app, market-wide statistics show that 90 per cent of customers who download an app and engage with it on a weekly basis during the first month are retained as long term users. Without that level of engagement, apps lose customers quite quickly. Indeed, financial services apps that don’t hit that weekly target retain less than five per cent of their users three months after their initial install.

We think that smart operators will therefore use that first month after SIM activation to quickly build a relationship with a new customer based on rewards and activities that can build progressive airtime credit extensions. All of this will drive engagement, and take the power in the relationship away from the agent, and place it firmly in the operator’s app. Another point to bear in mind: in highly competitive markets, many with 130%+ penetration rates, some operators lose a third or more of their newly activated SIMs even before the first top-up. This style of early engagement can stop that drain in its tracks.

Engagement can be further increased by developing membership style levels of user. It’s possible to encourage pre-paid customers to quickly transition through reward levels such as bronze, silver and gold and ensure that each move up the ladder adds more information to the operator’s dataset about that customer. The data collected and analysed from this engagement and interaction is then be used to fuel further offers, larger credit extensions and eventually other financial inclusion services.

This is what we term data science at work – driving a customer engagement, retention and loyalty program that delivers tangible results. In the Caribbean, Cable & Wireless was able to reduce churn by 50 per cent and increase ARPU by ten per cent in the first 120 days after installation of the app. Today, credit extensions are available to almost 95 per cent of the operator’s base and more than 25 per cent of its customers use the App every day. Those are powerful arguments for improving engagement with a pre-pay customer base.

The strategic use of credit extensions can help to effectively turn pre-paid customers into regular subscribers as well as help to build a range of personalised financial services that lock-in customers. But it doesn’t work if the credit is treated like as emergency-only service, and it doesn’t work if the customers are left open to other influences at the moment of truth. The way to do things differently is for operators to engage early, engage often and engage directly.

 

Jacquie Amacher VP Marketing at JuvoAs VP of marketing, Jacquie leads Juvo’s brand strategy and global communications efforts. She brings over 20 years experience in brand transformation and strategic marketing for both high growth companies and emerging technologies in the mobile technology marketplace. Jacquie was at the forefront of high profile product and digital service launches from leading-sector companies including Motorola and Verizon, and has served on the executive leadership team of two global advertising agencies.

UK consumers are not convinced by zero rating gimmicks

The telcos want us to spend more money with them, that is a given, but it appears the latest move to bribe consumers with zero rating offers is not working in the UK.

It’s been a slow creeping trend over the last couple of years, but the telcos are making less money. Whether it was the increasing irrelevance of voice minutes, or erosion of generated-cash through SMS, the data frenzy has been killing profits. It’s a cruel irony that the OTTs are using the very networks which the telcos have spent billions on to destroy the profit margin, but it is one which the industry has come to accept.

Monetizing data tariffs, and encouraging users to scale up to more expensive unlimited plans, was one way these trends could have been reversed. But according to new data from uSwitch, users are not convinced by new data plans that offer unlimited use of certain apps, favouring cheaper deals as opposed to the unlimited options.

“While these packages will be spot on for a large number of a mobile users – in particular younger users – they can feel a little restrictive,” said Ernest Doku of uSwitch. “For the older demographic that might not necessarily want to stream content on-the-go or who don’t use messenger apps, there will likely be little in this new provider battleground that stands out.”

Only 19% would switch to a contract with unlimited data usage on certain apps, with this number dropping to 11% for over-55s. 18-34 year olds were more receptive to the idea, with 26% open to changing providers. As 79% of adults now use on-demand services such as Netflix or BBC iPlayer, the telcos are making a fair assumption that these unlimited data tariffs would be appealing, but it does show sometimes statistics do not back up what was promised.

Mobile operators are increasingly turning to perks, such as free subscriptions or zero-rating offers, to attract new users, but it seems the UK are focused on the basics. 61% of the respondents to the research would change for a cheaper deal, 30% would change for better coverage and 23% would change for more flexible deals.

The last reason is an interesting one, and perhaps an encouraging statistic for Vodafone and Three. Both have launched more flexible, month-by-month plans (VOXI for Vodafone and Smarty for Three), which target more cash-conscious consumers.

That said, the statistics do also indicate one thing; to be a good mobile provider, you have to have a network which performs consistently well, and offer services at a good price.

This is a welcomed discovery for Telecoms.com, as it indicates the users of the UK cannot necessarily be bought off with gimmicks and advertising. The user is focused not on the short-term benefit of a free-service, but more of the performance of the telco, which will arguably have a greater impact on the users life.

But the smoke and mirrors should not be seen as a surprise. Why are telcos focusing on gimmicks and the cheesy endorsements of past-it celebrities, which make the brand look cheap and unappealing? Because you don’t have to spend as much on a second-rate celebrity as you do on making sure your network is up to scratch.

Perhaps this is another indication the telcos are shying away from actually investing for the long-term? Maybe it shows us the management team are more interested in short-term pleasures than longevity and sustainability? Or it might just say that the telcos don’t care about customer experience, just as long as they pay up once a month?

Vodafone launches VOXI sub-brand to get ‘down with the kids’

Vodafone has launched a new SIM-only deal for people aged 25 and under. Welcome to the party VOXI, innit!

The service itself follows the unveiling of Three’s new Smarty proposition, which targets a similar audience of youngsters. Like Smarty, it’s a month-by-month contract, which offers various data packages, with several apps not being included in the monthly data allowance. The idea here seems to be flexibility, an important factor in the lives of younger generations. Many want the idea of freedom, but the dreaded thought of looking for a new deal will mean they probably won’t.

“Why should young people make do with the same mobile plans as everyone else, when they use their phones differently and often can’t access the best deals?” said Dan Lambrou, who will be in charge of the new venture.

“We’ve worked with hundreds of people aged 25 and under, and have really listened to them. They are a generation that’s tired of being stereotyped and talked at. We created VOXI, a transparent new mobile service that gives our audience a platform to connect to the things that matter to them, whatever they’re into.”

In terms of the services available for ‘free’, Facebook, Facebook Messenger, Instagram, WhatsApp, Pinterest, Snapchat, Twitter and Viber all make the grade. What is worth noting is that once your data allocation has been used up, ‘free’ access to the above apps will be paused until this is rectified.

The team has also snuck in a condition for data throttling, though no specific were given in the statement. We’ve been told it will be measured on a case-by-case basis, but Vodafone has essentially given itself permission to throttle performance if ‘usage adversely impacts the service for other customers’. It’s a risky move, as while such grey areas and lack of concrete definitions leave wiggle room for Vodafone, but it also leaves the telco open to criticism from both customers and competitors.

The party line is that they don’t expect to use it. The right to throttle will be reserved for those who essentially slow down the network because of their excessive usage. According to Vodafone, this will be because of commercial or fraudulent use of the contracts, though this is still a considerable amount of wiggle room for the team.

If this is starting to sound a bit like zero rating, then don’t worry, because it essentially is. The idea of promoting certain services over others has proved to be a bitter battle ground in the states, but we’ve largely avoided it here in the UK. That said, the zero rating trend kicked off a lot earlier on the other side of the pond; might we be in for a net neutrality brawl over the next couple of months?

Although Vodafone has stated it is open to approaches for new apps to be included in the zero rating offering, we wonder how many will actually be considered. It would not be difficult to imagine there being some sort of contra-relationship in the background to facilitate the zero-rating partnerships, but whether a new player would have any leverage to convince Vodafone its app should also be included in the deal is another matter.

This is the basic foundation of the net neutrality argument. Net neutrality supporters will state a company cannot ‘pay’ for better internet or a better experience for customers, which is essentially what zero rating deals offer. It gives them an advantage over potential competitors or challenges as data-conscious consumers will always favour the free option over the premium one.

To be honest, you can’t blame Vodafone here. It’s trying to keep in-line with the rest of the industry and hasn’t been held accountable by regulators. Three has launched Go Binge, Virgin Media offers zero rating for Twitter, Facebook Messenger and WhatsApp, and EE has an offer which allows for free streaming of Apple Music. These companies will push the boundaries until being told to stop. Ofcom should have a look here before frustration from the darker corners of the ecosystem becomes more vocal.

There are loads of mobile subscriptions – Ericsson

Ericsson has released its Mobility Report for the second quarter of 2017, and some of the statistics are somewhat surprising.

Firstly, let’s have a look at mobile subscriptions. Over the second quarter of 2017, an additional 92 million subscriptions were added to the global total. The number itself is actually growing 6% year-on-year, bringing the total up to 7.7 billion. That’s right, there are more mobile phone subscriptions than there are people on the planet. And there are those who would call today’s generations over-indulgent.

The total number of unique subscriptions around the world currently stands at 5.3 billion, which means that on average, for every person there are 1.45 mobile phone subscriptions. Next time you are sat on the tube, look to your right and then to your left. Statistically, one of those greedy b*stards has two mobile phone subscriptions. We bet it’s the guy who has the shirt with different colour cuffs and collar to the rest of the material.

Sitting at the top of the pile, in terms of net additions, is China with 19 million. There will be few surprises there, and perhaps few with the next couple of entries. India, Indonesia, the Philippines and Ghana complete the top five. In fact, when you go back to the total number of subscriptions, there are more in China and India (just over 2.5 billion), than there are in Europe, the Middle East, North America and South America combined.

Another interesting area is the room for growth in the smartphone market. Smartphones now account for 56% of the total subscriptions, accounting for 80% of all sales across the most recent quarter. The budget smartphone market is not one which is seen as attractive to the big boys, but if someone could come up with a practical and affordable smartphone which would suit the emerging markets, there is a lot of room to make money. Unfortunately, this is not seen as a viable or attractive business model.

In terms of the total amount of traffic which is crossing the networks now, this is another area which has seen a notable uplift. An increase in data just goes without saying, however Ericsson has noted pricing trends in India and the introduction of more favourable data plans, has bumped up the numbers further than expected year-on-year. Sequentially, the total amount of data consumed increased by 10%, though comparing Q2 to the same quarter in 2016, the uplift stands at 67%.

Mobile Subscriptions 2 Mobile Subscriptions