Thursday, February 17, 2005

fyi Prepaid Phones Get a Bad Rap From Crime Use


Pointer to article:,,SB110858146259256702-IFjeoNnlaZ4n5yoa4KHbayCm4,00.html

Kobielus kommentary:
It all comes down to identity. With prepaid cellular plans, people can buy the phones and airtime refill cards from pretty much anywhere. They can use cash. They don’t need to present identification to the carrier to activate the service. So, yes, they provide anonymity. And anonymity is an important weapon in the arsenal of criminals. So I’m not surprised that people are taking advantage of this feature of prepaid plans in order to commit what one might call “drive-by calling” (dump the phone after the deed’s been done).

Of course, Japan (the US and Sweden as well) is one of the few countries in the world where prepaid hasn’t succeeded in dominating the consumer cellular market. But I doubt that prepaid phones/plans are involved in criminal activity any more than postpaid phones/plans. The problem with prepaid, as implemented generally, is that these plans frustrate criminal investigations after the nasty cellphone-facilitated deed has been committed.

Prepaid is an offering of growing importance for most cellular carriers, and for customers who like the “built-in call budgeting” that comes from having to explicitly purchase airtime minutes in advance. For their part, cellular carriers make too much money off the hefty airtime charges from prepaid (higher than postpaid plans) to turn their backs on this approach. So you best believe the carriers aren’t eager to monkey with a good thing, though they would prefer that customers lock into long-term postpaid contracts, thereby reducing churn, but customers generally feel otherwise.

Nevertheless, it is possible to introduce customer identification into the prepaid mass-market equation. If customers are given incentives to use their credit cards when buying phones and airtime, then it would be easier to identify those who use their prepaid plans for bad purposes. Many cellular carriers provide bonus airtime to customers that have signed up to auto-refill their airtime balances from their credit cards (or debit cards or bank accounts).

As the article states, some countries are legislating on the issue, requiring prepaid customers to provide ID upon purchase. That’s a good approach, and it should be adopted by countries the world over. In the US, you have to show ID to purchase handguns, so why not for cellular phones as well? However, nobody in their right mind would require background checks on cellphone purchases (gasp--I'm sorry I even put the idea in people's minds).

The Cellular Telecommunications and Internet Association (CTIA) needs to take a strong public position on prepaid plans and the need for customer identification. Otherwise, this issue will fester and put an important service category on the defensive in the PR and regulatory arenas.