Megafon Offers Rebates Based on Monthly Usage

Russian mobile operator Megafon is offering a new tariff line called Connect, which offers customers cash back based on their subscription and roaming expenditures. The rebate will be 10 to 30 percent of monthly spending on services, depending on the duration of use. Initially it is 10 percent and rises to 15 percent after three months, 20 percent after six months, 25 percent after twelve months and 30 percent after 24 months.

Customers will be able to use the rebated funds to purchase goods and services from the operator.   

We find this offer to be an interesting and, one might say, counter-intuitive one that could be quite appealing. In customers’ minds, generally speaking, greater consumption of services is strongly associated with greater charges, so the idea that one gets more money back the more one consumes is counter-intuitive, in a positive sense.

The rebates should have the effect of incentivizing people to use more voice and data services, whether at home or abroad, by means of the promise that they will receive greater and greater rebates the more they spend. The further promise to increase the percentages of the rebates over time is intended to retain customers (given that this is apparently a pay-as-you-go tariff), and since the increases are quite substantial, amounting to tripling the rate within the allotted period, the strategy is likely to work.

One point to note is that the rebate seems to come in the form of funds which can only be used to make purchases from Megafon itself, and that could well be perceived as excessively limiting by many consumers. On the other hand, if it were a true “cash” rebate, all it would amount to is a percentage discount on services, which may not be particularly exciting for customers who already are used to changing pricing structures. In a way, the offer of credit toward purchases from the operator may actually be more appealing.

Of course, that will depend on the nature of these goods and services. If they consist of value-added services such as streaming entertainment content and extra SIMs or lines, that would probably accomplish the purpose well, because those could likely be purchasable in their entirety with the funds accrued in the short term. Mobile devices would be a harder sell, in that the rebates would only offset the price by a relatively small amount. In general, an operator launching a plan such as this should be sure that the “goods and services” in question represent genuine value for the customer and are affordable.

Tarifica is the global leader in monitoring and analyzing telecom pricing. Covering hundreds of operators in every region of the globe, Tarifica’s databases of mobile and fixed line data and voice tariffs are among the largest and most in-depth in the world. Tarifica is also a leading publisher of benchmark and other pricing reports, and its analysts are recognized authorities in the telecom industry, relied upon by operators and businesses worldwide for pricing insight and guidance.  

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Russian Operators Oppose Introduction of eSIMs

Russian mobile operators MTS, Megafon and Beeline are opposing the introduction of eSIMs in the country according to a news report. The operators object to eSIMs, which are used by the latest smartphones from Apple and Samsung, on the grounds that they could lead to price wars and that they do not support Russian encryption standards.

The operators expressed their position during a meeting with representatives of the government and the federal security service FSB. Representatives of the FSB were also opposed to the eSIM technology.

The eSIM technology, which is becoming more and more widespread, brings various benefits to users, but from the  point of view of the established operators in the mobile market, the advantages are less clear. Certainly, we can understand why MNOs might even think there are no advantages.

For one thing, with embedded eSIMs, changes of service provider can be made seamlessly, without changing devices and even without needing to obtain a new SIM card. This would increase churn by making it easier for consumers to switch from the services of one operator to those of a rival. And the rivals that would most benefit from this process are likely to be the more disruptive ones, the budget-oriented and narrowly targeted MVNOs. It is also possible that eSIMs would facilitate the entry of foreign telecoms into the Russian market. Therefore it is completely understandable why Russia’s MNOs would oppose the introduction of eSIMs.

However, we feel that despite the existence of these theoretical objections to eSIMs, in the real world of today’s markets, they are not very likely to have a significant negative impact on MNOs’ business. The major operators have a good deal of momentum in their markets, with a long-established customer base, and in most cases it will likely take more than just the ease of using eSIMs to cause users give up their accustomed service in numbers that can harm the operators. In fact, eSIMs could even save MNOs money, in that their use will eliminate certain costs such as the creation, distribution and support of various formats of physical SIMs. Of course, operators do need to be vigilant about maintaining their customer base and keeping their network service competitive, but we doubt that eSIMs are a game-changer, and so MTS, Megafon and Beeline probably do not need to be so concerned. (As to the question of encryption, we cannot comment at this time because we do not sufficient information about Russian encryption standards.)

In addition, there are actually tangible advantages for MNOs in eSIMs, outside the realm of traditional mobile services. In the emerging realms of IoT and M2M, eSIMs enable a wide range of applications that stand to bring large amounts of revenue to operators that embrace them. If the Russian operators, took this route rather than lobbying to keep eSIMs out, they could put themselves on a path of growth not only of revenue but of possibilities.

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 If you have any questions about this article, feel free to contact our Editor-in-chief John Dorfman at jdorfman@tarifica.com

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Operators Offer Ramadan-Oriented SMS Services

On the occasion of Ramadan, the holy month in which Muslims fast from sunrise to sunset, two mobile operators are launching SMS services designed to serve the needs of believers. Uzbekistan MNO Ucell has introduced its Ramadan Calendar, a text-based information service listing the prayer and fasting schedule for the coming five days. It is available free to all subscribers and can be activated via USSD. In Tajikistan, operator Megafon is offering an SMS service called Takvimi Ruza that provides fasting and prayer schedules, sourcing the information from the Central Mosque of the country’s capital city, Dushanbe. It, too, can be activated free of charge through a USSD menu.

As we have observed on a number of occasions, services that are tightly targeted based on a true understanding of the culture and needs of one’s customers are an excellent way for an operator to build loyalty and promote retention. Unlike the premium SMS services discussed above, Ramadan SMS services are free and have genuine utility for the mobile subscribers in question. 

The above item appeared in a recent issue of Tarifica's "The Story of The Week", a weekly report that analyzes two noteworthy developments in the telecoms industry from around the world. For past issues or to learn more about The Story of The Week :  http://www.tarifica.com/storyoftheweek.aspx