Sim-only mobile services take off

Sim-only services significantly reduce subscriber acquisition and retention costs

Sim-only services are helping to breathe new life into saturated developed mobile markets, new research reveals.

The Sim-only concept, which was pioneered by discount mobile virtual network operators in northern Europe, is now being embraced "enthusiastically" by mainstream mobile operators, according to Informa Telecoms & Media.

The approach holds two key attractions for mobile operators. Firstly, it allows them to accelerate the migration from pre-paid to post-paid price plans.

Secondly, it significantly reduces subscriber acquisition and retention costs. Sim-only customers keep their existing phones so operators do not need to resort to costly device subsidies.

"With the impending credit crunch in many developed markets we believe that Sim-only services are extremely attractive to consumers who are prepared to keep their old phone in return for lower subscription and usage fees," said Mark Newman, chief research officer at Informa Telecoms & Media.

He added that, while Sim-only services are an effective tool to win market share, reduce subscriber acquisition costs and cut spending on customer retention, mobile broadband is a brand new revenue stream for mobile operators.

Informa noted that HSDPA dongles are among the top-selling devices for mobile operators in a number of European markets, and made up more than 50 per cent of the global total of 30 million HSDPA subscriptions at the end of 2007.

The number of 3.5G-connected laptops will rise to 184 million by 2012, according to the analyst firm.

At the heart of the debate about future mobile operator business models is the extent to which mobile operators risk being relegated to the role of "dumb pipes".

"Mobile operators have spent the past 10 years trying to develop services that reduce their dependency on voice, but they have had limited success beyond SMS," said Newman.

"With the arrival of internet services on the mobile screen, this is set to change. But will it be them, or the mobile operators that end up reaping the rewards?"