NEW YORK-Wireless prepaid services will provide $1 billion in revenues to American carriers this year, double that amount next year and quadruple the figure by 2001, according to projections cited by Edward A. Hixon, vice president of Open Development Corp., Norwood, Mass.
Although it is generally believed that European, South American and Asian telecommunications providers have been more aggressive in prepaid services, information on international markets is just now becoming available, said Al Samball, director of product management and strategic business development for InterVoice, Dallas.
Hixon and Samball were panelists at the International Prepaid Forum, held in December, which was sponsored by IBC USA Conferences Inc., Southborough, Mass.
“In the (United States), it’s almost like, `Oh, your credit application wasn’t approved. Please step into this other room,” Hixon said.
Samball agreed that appropriate marketing “is absolutely critical.” But he also said Hixon’s generalization about treatment of prepaid customers as second-class citizens doesn’t take into account specific examples in this country.
“I met last week with a nationwide (personal communications services] provider in the [United States) that is doing more than 50 percent of all traffic on their network in prepaid,” he said.
Prepaid services often are discussed in terms of their potential for expanding the overall customer marketplace for wireless communications.
But that isn’t necessarily so, and carriers must evaluate the potential drawbacks.
Carriers need to “decide whether you want to avoid or don’t care if prepaid cannibalizes post-paid,” said John N. Tallarico, senior product manager for Open Development.
Another consideration is the evolution of prepaid services beyond the term’s initial meaning of advance payment at a flat rate for airtime minutes.
“You can plop in a [personal computer] and do the prepaid call processing, but you need the data underneath to do the tracking and control to build a business,” Hixon said.
“What you need are integrated systems: billing, customer care, fulfillment, banking/debit functions.”
Carriers and their customers also are looking for bundles of different wireless and wireline prepaid and post-paid services with multiple rate plans, Samball said.
“Everyone wants to talk about [advanced intelligent network] equipment and services … moving to AIN-enabled killer [applications] for prepaid wireless and wireline services,” Hixon said.
Providing that complexity is now possible, but it can get pricey. Samball said he has identified just 11 carriers in this country large enough for advanced in-house prepaid systems. Hixon said Open Development had its origins in the pursuit of high-end systems provision for regional Bell operating companies, although it is now able and willing to offer smaller systems for wireless and wireline carriers.
“Everyone is now recognizing you can’t get everything from one vendor. You need turnkey integration of best-of-breed technology,” he said.
For those telecommunications companies that still find the installation of such systems too expensive in the short run for quickly recovering the associated capital outlays, Tallarico said, “there are service bureaus that will do this for multiple carriers.”
