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New research has shown that up to 80 percent of some mobile phone operators' customers are prepaid but they are generating only 20 percent of revenues.
"Major mobile phone operators are unhappy at the high levels of usage of prepaid mobile phones among their customers because they account for such a small part of their revenues," said Nathan Budd, research analyst at marketing consulting company Frost and Sullivan.
Budd said that companies were putting up the price of handsets and increasing the minimum size of top up cards to try to generate more revenue. He said operators were paying out up to STG350 on a handset for a customer but were not getting the return as many were young people who used text messages or people who were budget conscious.
Orange, the UK mobile operator, recently abolished STG5 calling cards for its prepaid mobile phones. Furthermore, in Japan mobile phone operators had withdrawn subsidies for mobile phones, forcing customers to pay the full price for handsets, said Budd.
Mobile operators in Ireland were reportedly looking to take similar action a few months ago as the market here reached saturation point.
The findings came out of a report into the prepaid calling card industry by Frost and Sullivan.
The research, which also studied other implications of prepaid mobile phones, showed that gains made by prepaid calling cards for phone boxes in the early 1990s have been virtually wiped out by the popularity of mobile phones and wireless devices.
Budd said that the market for prepaid calling cards was now only 25 percent of the size it was in the early 1990s as people increasingly have mobile phones. The research predicts that this decline will continue with the market dropping from a value of USD1.69 billion in 2000 to USD75 million in 2007.
The market is now limited to older people, technophobes who do not want a mobile phone or young people who do not want to bring out a phone at night and instead bring a calling card with them.
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