Traditionally, the SIM-only approach has been used for prepaid plans of various sorts, which do not involve an handset subsidy or contract. In other cases a ìprepaid hybridî approach has been used, which combines the pay in advance scheme with unlimited, rather than metered usage.

The latest wrinkles are SIM only contracts for the traditional postpaid market. The most popular seem to be the 30-day postpaid plan with no handset subsidies, or the contract plan that typically does subsidise a handset.

Traditional prepaid and postpaid tariffs alone are not sufficient for operators to cater for all the needs of the mass market. There are now six different manifestations of mobile subscriptions: pay as you go; prepaid hybrid; prepaid bundles; postpaid SIM only over 30 days; postpaid SIM-only over 12/18/24 months and postpaid bundles.

Postpaid SIM-only tariffs make most sense in mobile markets that are saturated, primarily using postpaid plans, where handset subsidies are feasible and where high competition exists. SIM-only plans combine the advantages of predictable revenues with lower subscriber acquisition costs, as well as the ability to retain price-sensitive postpaid customers.

SIM-only plans will hurt handset sales, however, and that will lead handset providers to incorporate more value in their handsets, and offer more services on their own. That wont help mobile service providers ìmprove up the value chain.

So far this approach has not been common in Europe in large part because use of ìunlocked phonesî has not been encouraged by mobile service providers, who have relied largely on the subsidized handset model. SIM only assumes easy and affordable access to unlocked phones.

Tags: SIM only contracts, Vodafone