Buying Prepaid Customer Loyalty

Hutchison Whampoa's 3G carriers around the globe have provided an interesting and entertaining saga over the last few years. From its UK unit's insistence on video calling as the next big thing then attracting customers only after slashing prices for plain ol' voice calls, to blaming a lack of competition for poor results, to calling people that want open internet access on their phones "nuts", to having people that unlocked handsets it sold arrested. Now, after battling to lower customer acquisition charges for some time, it's hoping to buy Italian prepaid users' loyalty by offering them 9,000 euros of free credit to switch from a rival carrier. Customers that jump ship can earn 50 euros per month in free credits for the next 15 years, so long as they spend 20 euros per month to refill their prepay accounts. Operators have long struggled with how to hang on to notoriously fickle prepaid customers, and plenty of MVNOs have found success by eschewing complicated tariffs and offering low prices rather than trying to buy loyalty. And never mind that a significant attraction of prepaid service is that users can avoid lengthy contracts or other long-term tie-ins.

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