Better cost control
Today’s wireless operators have to deal with ever-growing numbers of SIM cards. Most operators employ a process where SIM cards are pre-provisioned in the network before shipping into distribution channels, but these resources become increasingly strained as SIM card volumes grow.
Pre-provisioning requires the allocation of core network capacity and resources well in advance of a card being used, so unnecessary costs are incurred for inactive SIMs. But a new alternative to pre-provisioning is emerging which allows SIM cards to be activated when a mobile is first switched on. This method could be of great benefit to Asian operators.
With close to 1.9 billion mobile subscribers and an average annual growth of over 30% in all but the heavily penetrated areas, the Asia region has the fastest growing telecom markets in the world.
But among operators in the region there is no sense of complacency. They are aware that to drive their competitive edge, they need to tightly control the cost of growing a prepaid customer base, while simultaneously adding flexibility to the distribution model and engaging more closely with subscribers.
Operators across Asia are distributing ever-increasing numbers of SIM cards to end-users to help drive market growth, sustain a churning subscriber base or to support new offers such as SIM-only.
With the current pre-provisioning model, each new card requires space on the HLR and other key network elements, including messaging systems and prepaid intelligent network nodes.
So operators will typically be forced to make a large upfront investment, not only in the cards themselves, but in the network space they occupy. Much of this ends up wasted because a significant proportion of SIM cards shipped are lost, damaged or become obsolete in the supply chain, while many give-away cards are never used. Each of these cards will also need its own mobile number (MSISDN) and in some countries these numbers are increasingly in short supply.
The problem is growing. SIM card volumes across Asia are likely to show continued rapid growth in the coming years. If they hope to keep costs under control, operators simply cannot afford to invest significant sums on SIM distribution.
While tackling the problem of rising costs is an urgent priority, operators are facing a broad range of additional challenges. Many countries in Asia Pacific have regional mobile numbers, meaning that the next few digits after the prefix denote a particular city or area of the country.
As the SIM card starter pack usually has the relevant number printed on it, that pack must then be sent to a specific location. This creates logistical and distribution challenges.
In tackling these issues, operators increasingly recognize that the expensive pre-provisioning model is no longer viable. The difficulty is finding a cost-effective alternative that can replicate the key advantage of that model -- the SIM works as soon as it is in the hands of the end-user.
Up to this point, the only alternative has been provisioning at point of sale. But a third option now exists; a new approach that enables the allocation of network resources to be deferred until the point of first use.
The solution, known as dynamic SIM allocation (DSA), enables new SIM cards to interact with the provisioning process via the mobile network, despite not having previously been provisioned.
Several major operators around the world - including two in Asia - have committed to deploying DSA, and some have already gone live.
DSA allows operators to eliminate many of the upfront costs of pre-provisioning. In particular, it helps them avoid the need to buy and commission more network platforms than are actually required, merely to accommodate SIM cards that may never be used.
These choices are presented to subscribers via menus in their own language that appear on their phone's screen the first time they use the SIM card. They can also be shown on a dealer handset or portal.
This solution manages the dynamic allocation of resources on first use, meets users’ performance expectations and works with all distribution channels.
For operators across Asia Pacific, it helps simplify the whole distribution process by supporting the use of generic SIM-card starter packs that do not contain a specific MSISDN. A blank starter pack can now be shipped anywhere in the country or even redistributed if there is a shortage somewhere else.
Because many operators have multiple brands or tariffs, a generic card can also allow the subscriber to choose the plan they want. This further saves SIM-card and distribution costs and allows dealers to stock a smaller range of items.
Another advantage of this is that it allows the subscriber to choose their own phone number. Customers who choose their own numbers typically generate higher ARPU levels for the operator. Evidence suggests that these subscribers are also more likely to stay. In some markets, the average lifetime of a subscriber before churning is as low as four months. If this can be increased by even a few months the value of the subscriber base increases significantly.
Stuart Cochran is CTO of Evolving Systems