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Latin America’s mobile telephone operators have unleashed the secret to phenomenal growth in cellular telephone subscriptions: prepaid mobile and "calling party pays" (CPP) programs. But in letting the genie out of the bottle, they have unwittingly pushed their businesses to the brink of disaster. Prepaid and CPP have fuelled skyrocketing penetration rates, but at the same time they have undermined overall average revenue per unit (ARPU).
Per-user revenue peaked well above US $60 per month in the mid 90s but is now less than $15 per month across the region, pushing most operators into the red. Most companies have responded by looking to new technologies for increased revenue, cutting operating costs and eliminating the subsidy of new subscriber handsets. The real solutions lie elsewhere — mobile companies should be searching for ways to leverage their existing subscriber base to tap into markets outside of their telecommunications networks.