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How to use mandatory pre-paid SIM card registration to your advantage

15 December 2017

MVNO B2C mvno strategy pre-pay

The recent spate of terrorist attacks across France, Belgium and the UK has once again sparked discussion around the mandatory registration of pre-paid SIM cards. Registration is already mandatory in several EU countries, including France, Germany, Spain, and, as of this year, Belgium.

Phone identity fraud.jpgIn 2012, as part of its counter-terrorism measures, the European Commission (EC) asked all EU member states to provide evidence of the impact, or potential impact, of banning anonymous pre-paid SIM cards on crime and terrorism. However, there was no solid evidence supporting the hypothesis, so a number of countries, including the UK, Czech Republic and Romania, have not mandated this scheme.

This is not an issue limited to Europe: across the Atlantic in Mexico, mandatory pre-paid SIM card registration was introduced in 2009, but was later repealed in 2012 after it was seen to have had no effect.

When mandated, the burden of pre-paid SIM card registration on operators can be very heavy, in terms of both cost and general disruption. The additional costs of equipment, registration points, extra staff and increased marketing, coupled with the lost revenue from customers who are deactivated because they don’t register in time can force operators to exit the market. Belgian MVNOs Aldi Talk and Simyo have both ceased operations as a result of the new regulations. At the very least, operators may stop accepting new customers during the registration period, and may stop investing in network improvements.

Effect on the pre-paid market

The mandatory registration of pre-paid SIM cards causes a decline in the pre-paid market as unregistered SIMs are deactivated. In Belgium, registration started in December 2016 and all unregistered SIMs were deactivated in June 2017, and there has already been a notable decline in the pre-paid market. According to Telecompaper [1], pre-paid customers in Belgium accounted for 23.3% of mobile customers at the end of March 2017, down from 27.8% the year before, and from just over 40% in 2015. However, this decrease isn’t just down to the new regulations; around this time, operators increased their focus on quad-play plans, which encouraged more customers to move from pre-pay to post-pay.

Move your customers from pre-pay to post-pay to hybrid

Improved customer experience.jpgThis is a first step to success for operators: get your customers off the burning platform of pre-pay and on to more secure post-pay contracts. But don’t stop at post-pay: continue down this road to offer hybrid pay anytime plans. These plans offer customers more flexibility and an improved customer experience, especially if you develop a real-time customer care app, making them less likely to churn. Customers will also spend more, particularly if your app offers one-click payment.

When your pre-pay customers register with you, whether or not they upgrade to a post-pay or hybrid plan, you will obtain more information about them, which you can use to craft appealing offers. And, if registration is state-mandated so all operators have to comply, customers won’t be able to avoid registering by switching to a different operator. In some ways, the state would be doing you a favour.

However, these benefits aren’t dependent on your government mandating pre-paid SIM card registration; you can start encouraging your pre-pay customers onto post-pay and hybrid plans right now. Take this opportunity to review your overall proposition to ensure that you can compete effectively in your market. Ensure that your customer experience is outstanding and create compelling offers that reflect your customers’ demands and expectations. Do all this and your pre-pay customers will be upgrading their plans long before they are forced to register.  

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[1] Telecompaper, ‘Belgian mobile market: prepaid share falls on mandatory registration, shift to quad-play’ https://www.telecompaper.com/background/belgian-mobile-market-prepaid-share-falls-on-mandatory-registration-shift-to-quad-play--1198984