Monday, July 30, 2007

Brazil's New Mobile Regulations: Pro-consumer, Pro-Operator or Both?

by Karen Coppock

Several news outlets, including, carried a story today reporting that "Brazil Regulator Announces New Pro-Consumer Cellular Rules."

Could these rules, which include the requirement that prepaid mobile phone credits must be reactivated when phones are recharged and must be valid for 180 days rather than current requirement of 90 days, be good for mobile operators as well? Definitely.

During a global study of potential first-time mobile handset purchasers, our field researcher team in Egypt reported that Mobinil's new Lifetime Validity program (allows customers to make only one charged call every three months to retain their prepaid-account) was mentioned as an incentive for low-income individuals to finally buy a mobile phone. Mobinil's CEO notes “...this has had a very significant market impact for us. We saw large subscriber growth following the introduction of this offer...” Vodafone soon launched a lifetime validity program of its own and in its July 2007 Interim Management Statement, it noted that "Organic customer net additions were 1.0 million, with a positive reaction to the introduction of lifetime validity for prepaid customers."

Whether they are forced, as in the case of Brazil, or pushed for, as is the case of Mobinil in Egypt, business model innovations will put mobile phones and service at the reach of individuals lower and lower down in the economic pyramid - likely to the benefit of both consumers and corporations.

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