Phone cards 'blight' mobile market

Is it no longer 'smart' to carry a mobile phone? The last year has seen a rapid development of pre-paid GSM cards and we have, for example, featured France Telecom Mobile's Mobicarte. During the last quarter of 1996, the pre-paid GSM card market grew by 250,000 a month, with about 850,000 cards in use by the end of the year. Worldwide, there are estimated to be about fifty operators in the market at present. The Italian market is particularly active and the Timmy card (from Tim) is especially popular: within three months of its launch in September of last year, there were • already 570,000 subscribers - two thirds of the total European total for pre-paid GSM cards. London-based CIT Research, who recently produced the thirteenth of their wide-ranging reports on mobile communications in Europe, claim that one in ten West Europeans now has a mobile phone - with the market having grown by 56% last year to a total of 35 million. However, 75% of this growth cOll)es from the low-spending consumer sector and, as a result, margins are being squeezed. According to the report, new marketing incentives, such as pre-paid cards, are casting a shadow over the industry's profitability. The cards do not incur monthly fees, allow calling at typical consumer tariffs up to a fixed value and can be re-charged as and when required. These services are attractive to operators: they do not require a contract and, consequently, have the benefit of eliminating credit checks and bad debts, as well as being paid-for in advance. However, the result, says C1T (who estimate that there will be 17 million cards in use in Western Europe by 200 I - nearly a fifth of subscribers), will be to increase the number of 'low quality' (Le. barely profitable) users who spend little on calls. It is, however, true of any new development in telecommunications that what starts off as an essential tool for an elite group, subsequently filters through to the rest of the population.

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