5 years ago today...UK mobile companies benefit from pay-as-you-go schemes

But was rapid growth worth it in the end?

02.10.98 The UK's national mobile phone operators - Cellnet, One2One, Orange and Vodafone - have this week recorded healthy customer gains for the most recently completed calendar quarter. Vodafone still leads the way, with over seven million customers worldwide, and just under four million in the UK. The company has signed up over 300,000 UK customers since June this year - 127,000 of whom joined the Pay as You Talk scheme. Cellnet's performance also picked up, not least because it has joined the other three operators in offering a pay-as-you-go service. The BT-Securicor joint venture has had 80,000 customers join its pre-pay Easylife package. Justine Hayes, principal analyst at the Yankee Group, commented: "Pre-pay is opening up new types of consumer markets, and it will become increasingly used by some businesses as a way to control costs." Peter Richardson, an analyst at Gartner Group's Dataquest unit, said the growth of these services would not be detrimental to business users. The business market is projected to grow more slowly than the consumer market. 02.10.03 Sure enough, pay-as-you-go did end up driving the UK and other mobile markets. The inclusion of occasional phone users, the young and those with poor credit ratings saw penetration rates rise rapidly. But was it worth it? The operators' numbers swelled but it wasn't long before schemes came in to record the details of those buying phones. It was good to have more users but not good to have lots of anonymous users. Yet kiosks to sell phones and keep track of buyers and other approaches never took off. A couple of years down the line the operators also decided they should recalculate their subscriber numbers, reflecting real average revenue per user (ARPU). For example, Vodafone may no longer be the biggest in sheer numbers but its ARPU is healthy. That's what happens when a lot of 'lemons' get dropped by an operator - and unfortunately a lot of the least profitable customers came from pay-as-you-go schemes.