Mark,
To answer your question concerning Brite's prepaid wireless offering, yes, this is a landline application that has been modified to work in the cellular telephony environment. Without the complete integration of cellular networks in the application, the services provided by these types of platforms will result in the loss of features or the entire service when a subscriber roams outside of his/her home market. This is an issue that many vendors struggle with when deploying enhanced services in the wireless world. The only other alternative is to deploy multiple systems in all major metropolitan areas where carriers expect their subscribers to roam. As you can guess, this is a very expensive proposition. While some large carriers can afford this(AT&T Voice Dialing)only one vendor offering a service I know of has attempted this route at a very high cost. It may also help if you look at prepaid landline and prepaid wireless as two different animals. In order to understand the differences, you need to focus on the target market of each. In the prepaid card world, the users are driven by lower long distance rates afforded through the use of the card. While the long distance rates from your home or business are much lower, the card was intended to give you relief from high long distance rates while in locations where these home/business rates are not accessible by users. Hotels, Foreign Countries, University, Military, and Mobile Professionals are a few examples of the niche markets targeted by the carriers. In the prepaid wireless market, this service is targeted towards those users that cannot obtain regular cellular service. The majority of these users are people who fail the credit check that is performed in the store on every single prospective customer. The retailers do this because they are spending between $250 to $500 upfront(cost of handset, cost of marketing/sales) on every customer that obtains service. This is the reason they ask for your driver's license and request you fill out an application so that the credit check may be run while you are in the store. In order for the carrier to make a profit, they will require you remain a loyal customer within a certain timeframe depending on their upfront cost. I am a wireless consultant and I can tell you that approximately one third of the customers that apply for service are rejected due to the credit report. I think some simple math will tell you how much a retailer can lose when 33% of it's prospective customers walk out the door with out making a purchase. In some Latin and South American countries the rates are higher than 50%. The need for this service is much greater than on the prepaid card side due to the high amounts of revenue to the carrier involved(tens of millions on an annual basis). I believe that we are just starting to see the tip of the iceberg on the revenue that this service can provide. The reason that it has not been promoted heavily in the investment community, is that the analysts associate prepaid wireless with prepaid cards which provide a lower revenue projection. Just my opinion but I think that 1997-1998 will see explosive growth in the prepaid wireless market translating into landslide revenue for the successful players. A large part of the market has already been taken by the early providers of this service. The issue of the Brite prepaid offering being a service vs. a platform sale was mostly driven by competitive pressure. Brite was losing prepaid wireless business due to their competitior's offering of a service rather than a turnkey purchase. Looking at it from a carrier's perspective may help you understand this aspect of the business. If two vendors offered you a service under the following circumstances:
Vendor A - requires you to purchase a turnkey platform costing hundreds of thousands of dollars, not to mention future recurring support costs or
Vendor B - offers to drop a platform in your network with very little upfront cost and no recurring maintenance fees in lieu of a per transaction or per minute of use fee.(Pay by the Drink)
Which would you choose? Which option has the greater financial risk if the service is not accepted by the subscriber community? Given the cash strapped status of today's wireless carriers, the wireless world is quickly gravitating toward the services based side of the business. If Brite had made this same move a year ago, they would now be the industry leader in prepaid wireless. I apologize for the rambling but after reading your last post, I went back through the last year of posts to this thread and noticed that while much information on market fundamentals had been posted, very little product info had been offered. Just trying to do my part.
Regards,
Crash |
