A Middle Man Could Bring Smartphones to Millions of Mexicans for the First Time

Thursday, May 24, 2012

After two years of intentionally losing money in a very smart way, a Mexican cell phone company is set to change the way the country’s consumers use mobile phones to access the internet. If their plan works, it could transform not only the Mexican phone industry, but consumer finance systems in developing countries around the globe.

When you bought your cell phone, you might have earned a few hundred dollars in discounts in exchange for the promise of sticking with your carrier for two years. Those shackling cell phone contracts might seem like a hassle, but they’re a first-world luxury. Mobile plans that bill you later, rather than forcing you to pay upfront, end up saving you money and making your life easier.

“When you’re 35 years old, you have a job, you have a family, being on prepaid and running out of minutes in the middle of a conversation, or not having access to a data plan because you’re buying megabytes on a one-off basis at the convenience store, can be a huge deterrent,” says Gabriel Manjarrez, CEO of Mexican cell service provider Micel.

A post-paid plan is essentially a loan from the cell phone company to the user—the company provides airtime now if the user promises to pay it back later. But that only works if the phone company is confident it’ll be paid back. Mexican phone companies have a difficult time maintaining that confidence because 85 percent of Mexicans don’t have a credit card or the kind of payment histories that make for a good credit score. Consequently, 85 percent of Mexican cell phone users have prepaid accounts without consistent search access.

Source: GOOD (link opens in a new window)

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Technology
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mobile phones