Russia: The Freedom Of Choice

With mobile customers constantly roaming around the global village, it is tempting to think that operators around the world are all facing the exact same challenges in terms of retaining customers, as the prepaid market is notorious for high-churn rates. However, our customer base tells a very different story, as mobile operators worldwide face challenges unique to their own markets.

Mobile phone users no longer need to carry around more than one mobile phone, since mobile manufacturers have created ingenious phones that are able to handle more than one SIM at any given time. For example, mobile handset manufacturer Samsung has recently announced a multi-SIM phone, in which case both SIMs are active simultaneously. This means that if a user is talking to someone on the 1st SIM gets a call on the 2nd SIM, then the phone owner will be able to see who is calling and can accept the call on the 2nd SIM.

This of course presents new headaches for mobile operators, as the challenge now is to retain customers on a “full time” basis. The customers are not necessarily going away, and thus Churning in the real sense of the word, but they become “dormant” for periods of time when they are utilising a competitive mobile network.

One of the markets in which we have seen the popularity of dual-SIM phones rise, is in Russia – boasting the largest mobile market in Central and Eastern Europe while continuously growing. In May 2009 the total number of subscribers reached 194.7 million, with customers being wooed by the three major service providers – MTS, VimpelCom and MegaFon, while competition intensifies with the increasing number of multiple SIM ownerships.

The legal framework in Russia has created a unique mobile market – there are more pre-paid customers than those on contract. Further, most users have dual-SIM handsets, where both SIMs are live and users decide before each call which one to use. As the majority of handsets are not purchased through the operators but rather from independent stores, Russian mobile operators are not able to lock handsets to their networks, and as a result, customers are able to benefit from different operators’ SIMs on a daily basis.

The power thus lies with the subscriber, making it extremely difficult for the mobile operators to lock in customer loyalty, as customers receive multiple offers from different mobile operators and are able to choose which offer to utilise. This practice results is intensifying the fierce competition between providers, as they are forced to offer attractive call rates in order to discourage users from switching to the second SIM for roaming or domestic calls.

According to InternetWorldStats mobile SIM card penetration in Russia has surpassed 100% while actual mobile user penetration is lower. For example, at the end of May 2009 SIM cards in use in St. Petersburg showed 174 per 100 inhabitants, while in Moscow there were as many as 195 per 100 inhabitants.

The key element in tackling dual-SIM usage is the ability to perform advanced analysis of customer behaviour. Specifically, there’s a need to detect constant usage, which points at the possibility that the user holds another SIM for specific types of calls. For example: usage of a SIM for limited phone numbers might indicate that the user has a SIM for personal use, and another SIM for work purposes. Other indicators could be destination changes such as off-net and on-net usage patterns, silent periods during the day, or balance rates.

With dual-SIM becoming an increasing attractive option to mobile phone users, the trend that became popular in Russia is now spilling over to other countries as well, including Sri Lanka and China.

Michal Samuels Hod is Marketing Manager at Pontis. Prior to joining Pontis, Michal served as Marketing Manager at NICE systems HQ, where she was responsible for defining and implementing the go-to-market strategy for the company’s products and services; creating and managing the production of company’s sales marketing collateral and events management. Prior to that Michal served as Senior Account Manager in global PR companies Rudder Finn and Euro RSCG, representing major customers such as Google Israel, CNN and Turner Broadcasting Group.