The end nears for anonymous, prepaid users

Emeka Obiodu/Ovum
04 Sep 2008

The days of the anonymous prepaid mobile call may be about to end as authorities across the world step up efforts to force all prepaid mobile users to register. Many reasons have been cited for this latest push to identify the 2.5 billion prepaid users globally, the main one being security reasons (combating terrorism and fraud).

While mandatory registration may be good idea in theory, its enforcement may stifle the robust growth in the prepaid market.

Ever since Portugal Telecom's TMN launched the world's first prepaid mobile service, MIMO, in September 1995, prepaid mobile communication has grown astronomically around the world. By June 2008, prepaid phones accounted for nearly 70% of all mobile customers worldwide.

Prepaid allows mobile operators to sign up almost anyone without worrying about how to collect payment for services. For the users, prepaid phones allows them to maintain their privacy and/or get onto a mobile network easily. This is in stark contrast to fixed telephones or post-paid mobile phone services.

There is a growing trend to register all prepaid mobile users. An increasing number of countries have set aside concerns about privacy and are advocating mandatory registration. Several have enforced it, are about to enforce it or are deliberating enforcing it.

These include Algeria, Australia, Bahrain, Brazil, China, India, Malaysia, Nigeria, Singapore, South Africa, Sudan, Switzerland, Thailand and Vietnam. The plan is to compel all existing prepaid users to register within a time limit and to force all new prepaid customers to register before their lines can be activated. Authorities hope that registration will help to combat:

"¢ crime (including terrorism and kidnapping)
"¢ illegal immigration
"¢ spam and cold calling
"¢ tax avoidance.

For operators, the prospect of mandatory registration poses big challenges. Most importantly, it takes money away from them, either directly through funding the registration process, or indirectly by reducing their pool of potential customers. Indeed, anecdotal evidence from Sudan and Malaysia suggests that some customers have abandoned their phones already.

Some operators have rejected mandatory registration, but most have bowed to the demands of security agencies and are involved in the registration process. Interestingly, an obvious by-product of registration is the weeding out non-active subscribers, a process that would help clean up their databases to reflect better subscriber count and mobile penetration rate. There is also potential for operators to use the data gathered for marketing purposes, especially in countries with lax privacy laws.

While many of the countries imposing registration ask for national identity documents (such as passports, ID cards, driving licences and social security numbers), this has not prevented widespread abuse of the system.

Already, there are several complaints of subscribers using fake IDs and addresses. India's Ministry of Home Affairs has suggested that two references must also be provided to overcome the problem, which sparked a furore in the country. It has also been pointed out that matching every prepaid number to an individual creates the potential for blackmail, stolen identities and miscarriages of justice.

Implementing a mandatory registration process in a society without a practicable identity system is an uphill task. Where users do not have any national identification or a verifiable address, authorities may cut them off from the network, disenfranchising a segment of the addressable market. Alternatively, the authorities may resort to photographing them for a new database, potentially creating an unwieldy behemoth.

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