Cell-phone carriers hail prepaid services as solution to high mobile phone bills
For those mobile phone users who complain that their monthy bill is consistenly four or five time larger than they anticipated, the secret to fiscal responsibility has arrived: prepaid services.
Prepaid cell-phone services, already immensely popular elsewhere in the world, give customers the chance to reduce their mobile phone bills by giving them a more active hand in controlling those bills.
They work much like conventional public telephone cards. Instead of paying monthly charges based on past usage, users pay in advance for a pre-allotted amount of phone time through the Subscriber Identification Module (SIM) in their handset.
Since mid-February, Ukraine’s two largest mobile phone carriers, Ukrainian Mobile Communications and Golden Telecom, have debuted prepaid services. Two others, Ukrainian Radio Systems and Kyiv-star, said they too plan to introduce the service in the future.
Golden Telecom became the first to introduce a prepaid service in Ukraine when it launched its UNI service for its GSM-1800 subscribers on Feb. 15. The company is confident prepaid services will be a hit with customers.
‘UNI is best summarized by its three main benefits: no service contracts, no monthly fees and no bills,’ said Jeff Howley, the chief operating officer of Golden Telecom GSM.
Golden Telecom charges a flat, one-time initiation fee of $50 for UNI. Once set up with UNI, users can purchase pre-allotted blocs of time in either $25 or $50 increments, which provide 60 and 120 minutes of airtime, respectively. The rate for Kyiv is fixed at 41.6 cents per minute – charges are not dependent on whether the call is incoming or outgoing, peak or off-peak. But the blocs of time have to be used within 60 days of the date of purchase, after which they become invalid.
Ukrainian Mobile Communications launched a competing prepaid service, SIMSIM, on March 2 for its GSM-900 subscribers.
UMC is offering a $50 starter pack to get people hooked up to its SIMSIM service. The starter pack logs people into the service and gives them about 63 minutes worth of free outgoing calls (or 116 minutes worth of incoming calls). Unlike Golden Telecom’s UNI system, the cost of SIMSIM airtime varies depending on whether the call is incoming or outgoing. But it also makes no distinction between peak and off-peak hours. UMC sells blocs of time worth $25 and $50. The blocs are valid for nine months from the date the service is activated.
Like Golden Telecom, UMC believes the prepaid system’s best features are its simple hook up and payment procedures.
‘SIMSIM is a so-called off-the-shelf product. It takes a minute or two and you are on line,’ said Oksana Ferchuk, UMC’s marketing communications coordinator. Cellphone carriers are marketing prepaid services as an ideal product for those who want the convenience of having a mobile phone, but who don’t want to be faced with unexpectedly high bills – on top of monthly fees – at the end of each month.
‘Usually when you get an important phone call you just talk and talk; you don’t notice how much time it takes,’ Ferchuk said. ‘Then you get a bill for, let’s say, Hr 1,500 and you start pulling out your hair. It’s impossible with prepaid services – it gives complete financial control over expenses for your mobile phone.’
And given that a second-hand GSM handset can cost as little as $20 to $50, the prepaid service should make mobile phones – previously the preserve of the wealthy – a realistic option for more Ukrainians.
‘UNI is the easiest way to introduce yourself to the convenience of cellular communications,’ said Golden Telecom’s Howley. ‘If you are an occasional user, this product gives you access to cellular for less than $25 a month.’
At present only around 0.2 percent of Ukrainians own mobile phones – one of the lowest rates in the world.
Judging from the popularity of prepaid services elsewhere, however, that number could soon increase.
According to UMC, 30-50 percent of mobile phone users are on prepaid schemes in Western Europe, where the system was introduced only three years ago. Closer to home, Romania’s first prepaid service attracted an astonishing 10,000 subscribers on the day it was introduced, while prepaid services have gathered about 200,000 adherents in Poland since being coming on-line in August of last year.
Golden Telecom would not reveal how many prepaid subscribers it inked on the first day its service was available, saying only that it was ‘many.’
UMC spokesman Andriy Hunder declined to relay the company forecast for UMC’s new prepaid service, but said that the company projects a significant increase in subscribers.
