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March 20, 2006

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manjara

Perhaps you mean SIM cards when you say phones?? Personally I have about 4 phones and about a dozen SIM cards. 4 UK, 1 Swedish, 2 Portuguese, 1 Dutch, 2 Thai, 1 Sri Lanka, 1 Hong Kong plus a few that I've lost along the way (they are easy to lose!).
That's the primary reason penetration rates are so high, because there are so many inactive SIM cards. It would be interesting to see a statistic on mobile phone subscriptions that made an outgoing call in the last month. I suspect the number would be, as you said, nearer to 60%, but probably even lower.

Tomi T Ahonen

Hi Manjara (again!!)

You are partially correct in your assumption. It is mobile phone subscriptions (you could say "SIM cards" in the GSM world where SIM cards are used or about 75% of all mobile phone subscriptions ha-ha)

But these are the reported active users. Network operators regularly have to remove inactive subscribers from their accounts. The frequency how often they do this depends a bit on the local reporting requirements such as with accounting cycles and the requirements of their auditors etc.

As to actual users vs subscriptions. There is not a perfect count as competitor network providers do not give this level of their proprietary customer information to their competitors. So in the USA Sprint would not share with Verizon and T-Mobile who are their subscribers so that Verizon and T-Mobile could identify which of their customers might have a second subscrption with Sprint etc. (UK substiute Vodafone, Orange and O2 for the above example).

We know that there are multiple subscriptions, obviously, but don't know the exact number. There was a recent estimate suggesting that at the end of 2006 there would be 200 million people with multiple subscriptions. These tend to be with the young employed part of the population in wealthier countries. Obviously a parent will not give a bunch of phones and subcriptions to a teenager ha-ha, and the elderly are still trying to get to terms with the first phone, far less to handle two or more phones/subscriptions.

Also as a separate issue, in markets with multiple technologies typically it is not possible to switch SIM cards. And in some markets phones are "SIM-locked" meaning that at least superficially the phones will reject an alien SIM card. Yes, there are illegal shops to get around this, but again, not all "typical" phone users feel comfortable going to an illegal shop to break the SIM lock..

But yes, the 103% penetration rate is based on active users, but yes, as I think I already wrote in my blog (I hope I did), this includes people with multiple subscriptions and/or phones.

Tomi T Ahonen :-)

Bob V

Why is it that these young people have multiple mobile phone subscriptions? It isn't obvious to me what utility they would get out of it. (Maybe I'm new to the party.)

Tomi T Ahonen

Hi Bob V,

Good question. We observed it first obviously in Finland from about 1999 and I was the first two write about it in a book in my second book, m-Profits in 2002, so I've had quite some time to ponder that proposition. There are actually quite many reasons for it.

First - the most common earliest group to get second phones are young employed people in the kinds of jobs where they get cellphones from the employer. Some employers have limits on personal calls, messages and web surfing (and many limit use of payments such as buying coca colas, paying for parking etc).

So as the young are very clearly addicted to the phone and are willing to experiment with services etc., they will soon discover the potentials of the phone, and if their employer limits this kind of use, they want another phone to do the cool stuff.

The second biggest reason is price plans. If you are on one network, and your new partner is on another network, it makes sense to get another subsciption as there is likely a lot of telecoms traffic between you. You then switch phones a bit in terms of who is on what network. Same is buckets and on-net off-net types of situations and evening specials and weekend offers etc. So if one carrier provides free evening calls, the other gives low cost weekend calls, you switch phone behaviour on those times, etc.

A third big reason is related to the first. Many employers will give a phone for personal use as well, as long as the employer agrees to take calls and messages on their free time, in effect to be "on-call" over the weekend and evenings. Some feel this is an intrusion, they take the cellphone for office hours, and then leave it at the office, and get a personal phone for private time. OF COURSE they carry the personal phone during daytime at the office as well...

A big problem for the industry is handset subsidies (the free phone with the 18 month subscription package). This promotes churn. This also results in customers running after the latest coolest phone, and easily collect subscriptions on many networks that are in various stages of disuse towards the ends of their contract periods.

Then there are pure technical network coverage reasons. You get one phone and service. Are happy with it. Then you notice that your golfing club has no coverage, but a golfing friend shows his phone on a rival network maintains coverage. You get a second subscription to gain this coverage.

There are more reasons, but these tend to be the big ones.

It is important to keep in mind that the second phone phenomenon is ONLY relevant to those who are addicted to the phone. If you hate your cellphone, then you would never carry two.

If you have two phones and subscriptions, you can start to do various games with it. You make selections on the specific tasks. One is the bulkier heavier all-inclusive phone for work with e-mail and web and speakerphone and WiFi etc. The other is the slim sexy night-time phone for clubbing and partying that fits in the tightest jeans.

Some people like to show off. Then they can play phone power-games in meetings etc, pulling out both (new shiny top-of-the-line phones) to impress the others about how important he/she is (ha-ha, sounds very familiar to anyone whose seen a certain 3G telecoms author/consultant named Ahonen)

All of these issues result in a radical change in the marketing of mobile operators/carriers. No longer is it like BMW vs Jaguar, you own one car, and maybe switch with the next purchase. Rather it is like Coca Cola and Pepsi, where you may well have both brands in the fridge at any one time..

And yes, I currently walk around with 3 cellular devices. My top-of-the-line PDA-phone, my megapixel musicplayer smartphone, and my 3G modem card for the laptop.... 3 times 3G ha-ha...

Thank you for writing Bob, more about second subscriptions in my second, third and fourth books.

Tomi Ahonen :-)

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and web and speakerphone and WiFi etc. The other is the slim sexy night-time phone for clubbing and partying that fits in the tightest jeans.

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I don't think it will stop until it reaches 200%. I think on average people will have 2 mobiles.

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Yeah, I knew that just by walking around and seeing that everybody has one (and some people even more than one)... it's not a study and it's empirical, but it approximates reality...

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A lot of people nowadays have 2 or more cellphones for some odd reason...

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