It seems like they are pricing this flat-rate pricing scheme too high....LWIN only charges $30. Why would it cost $22.70 in Brazil???
yankeegroup.com
Vésper Launches Innovative "Limited Mobile" Telephony Plan
Market Event
On October 31, Brazilian CLEC Vésper launched a new residential phone service plan, Vésper Portátil, to take advantage of new limited mobility of its wireless local loop (WLL) network. The Vésper Portátil product introduces three major innovations to the Brazilian fixed-telephony market: pre-pay payments, unlimited local fixed-to-fixed calls, and limited mobility. The switch to limited mobility is the result of a recent Anatel decision to allow WLL operators to sell cellular handsets instead of the more traditional, bulky terminal and to permit subscribers to use the handset within their home cell. Vésper will charge US$99.60 (R$259) for the handset and a pre-paid monthly fee of US$22.70 (R$59). The product already includes voice mail, call waiting, and caller ID services. Due to low data transmission speed, it does not offer the possibility of fax transmission or Internet access.
Market Impact--Fixed Telephony
Vésper's new service is certainly an attractive, yet untested, concept for the Brazilian fixed telephony market. Despite the innovative aspects of the service plan, as a result of severe disparities in the country's income distribution, Vesper's service can be afforded only by higher socio economic strata (SES) households. Lower SES households cannot afford US$22.70 (R$59.00) per month even with the attraction of unlimited calls. For instance, lower SES households that have recently bought a fixed line have an average usage pattern lower than 100 pulses a month, while a subscriber would have to use on average 390 pulses in a Telefonica line to match Vésper's price.
Vésper's new product does not have a great chance among higher SES households either. Vésper will have to fight for new adds in this market, since churn is very limited due to the lack of number portability.
Market Impact--Cellular Telephony
Vésper Portátil is based on CDMA PCS WLL technology and will be offered initially with the Kyocera QCP 1960 handset working at 1.9GHz frequency (mobile operators use the 800 MHz and 1.8GHz frequency). Anatel's decision to permit limited mobility will have greatest impact in smaller towns in which one antenna will be sufficient to reach the entire district. As subscribers in these areas will be able to have mobility in their entire township, the mobility and lower tariffs of Vesper's plan will lure away a decent, but modest, percentage of in-town cellular traffic. Given the relatively high monthly costs of the plan US$22.70 (R$59) in comparison to the average revenue per user (ARPU) of prepay cellular subscribers (approximately US$7.70 - R$20), Vesper will face difficulty in stealing away consumers that would have normally opted for a pre-pay cellular product.
Recommendations/Conclusions
If Anatel does not regulate Vesper's possibility in offering non-restricted mobile services, market rules and dynamics will change drastically. Anatel should watch Vesper's service evolution closely in order not to penalize cellular operators that invested billions of dollars on mobile licenses and infrastructure.
Given the high percentage of mobile users in dense urban areas, Vesper's latest service is unlikely to steal away any significant parcel of cellular subscribers. However, cellular operators should quickly adopt the convergence strategy and launch zone pricing for their subscribers to increase traffic and contribute to fixed-to-mobile substitution.
In order to increase the value of their fixed phone lines and exploit the weakness of Vesper's product, Telefonica and Telemar should offer unlimited local call plans as well as differentiated prices for Internet access. |
