While prepaid mobile phones are generating huge demand among UK consumers, they will not become a viable mobile communications option for business users for several years, according to analysts.
Network operator Vodafone said this week that half the UK population will be using mobile phones within five years, helped in part by the increasingly popularity of prepaid phones. Prepaid customers comprise 17 per cent of Vodafone's customer base.
Supermarkets, department stores and other retail outlets now stock prepaid phones, available at around #75 with no network contract, and a number of prepaid minutes included.
But the handsets available in prepaid deals often lack the advanced features demanded by business users, and call charges are still too high, said Dirk Bout, a mobile communications analyst at Dataquest.
Prepaid phones offer lower service costs, but the savings are generally realised by supplying a low-end handset, said Bout. This is attractive to consumers, "but prepaid phones for business customers are not an option," he said.
However, Vodafone says it will shortly be introducing more sophisticated handsets with its prepaid service to tap into the business market. "Because prepaid is doing so well, we are looking into using higher spec models in the future," said Vodafone spokeswoman Emma Terleske.
Demand for higher specification prepaid phones is likely to come from small businesses concerned about controlling cost, said Terleske. "In big companies, very high users making data and fax calls are not going to want to top up every couple of days," she said, adding that larger companies in general prefer centralised billing to individual billing.
Mobile penetration in the UK is currently around 15 per cent, and will increase to 30 per cent by 2002, according to Dataquest. Vodafone estimates that penetration will reach 50 per cent in 2003, a figure close to Dataquest's estimates according to Bout.
"Our long term vision is that in a country like the UK, penetration will reach 50 per cent," said Bout. "But while I don't think it will be realised by 2003, it won't be significantly different."
Fierce competition between the UK's four mobile operators could be having a negative effect on the market, according to Bout. Operators subsidise the high cost of handsets to make them more attractive to consumers, but service charges are set high to recoup the subsidy, he said.
"If they don't subsidise in the first place, they don't have to keep the cost of the service at a high level to start earning back the subsidy cost," said Bout. "This is holding the market back."
Vodafone also announced that its profits for the six months ending 30 September 1998 were up 60 per cent on last year to #476.9 million, on revenues of #1.56 billion.
Cotton seedling freezes to death as Chang'e-4 shuts down for the Moon's 14-day lunar night
Fortnite easily out-earns PUBG, Assassin's Creed Odyssey and Red Dead Redemption 2 in 2018
Meteor showers as a service will be visible for about 100 kilometres in all directions
Saturn's rings only formed in the past 100 million years, suggests analysis of Cassini space probe data
New findings contradict conventional belief that Saturn's rings were formed along with the planet about 4.5 billion years ago