“Calling party pays” cellular, already a reality in Europe, Japan and Australia, is a growing trend throughout Latin America.
In most places in Latin America, the cellular subscriber still pays for the airtime on incoming as well as outgoing calls. But this is changing as carriers realize the advantages of having the calling party pay.
Carriers are finding this pricing structure actually increases revenues in the long run. They say the “subscriber pays” pricing structure discourages subscribers from freely giving out their cellular telephone numbers-which means lost potential airtime revenue.
Carriers also find calling party pays an easier sell than the “subscriber pays” model. Encouraging cellular subscribership is easier if the differences between cellular and wireline service are minimized. With basic wireline service, whoever places the call pays for the call.
“The big benefit from calling party pays … from the users’ point of view*…*is the greatest similarity to conventional fixed telephones,” said David Murray, commercial vice president for Celumovil, which operates in the eastern region of Colombia, including Bogota.
This benefit is one he can appreciate. Involved with launching Chilean cellular service in 1989, Murray found that explaining to people the “subscriber pays” structure for cellular service was extremely difficult.
Venezuela
In Venezuela, calling party pays has been present-via government edict-from cellular’s inception in 1988. That situation wasn’t changed when the telecommunications industry was privatized, a process that began in the early 1990s.
“Here in Venezuela, it’s very common to see your cellular phone [number on] a business card, for example.”
One thing that has changed since that time is the number of cellular subscribers in the country. Movilnet, one of two cellular operators in Venezuela, reports that while it had just 8,000 subscribers in 1992, it has more than 170,000 today.
One of the reasons for such rapid growth is that cellular is being used in place of wireline service. To help facilitate cellular use as a personal communications tool, Movilnet offers a special rate plan under which subscribers pay a relatively low monthly fee. And that, together with calling party pays, makes cellular particularly attractive for personal use.
“The people are using that phone almost only to receive calls, and they don’t pay for those calls,” said Felix Ohep, vice president of systems for Movilnet. “They only pay a monthly fee.”
This type of tariffing structure has allowed customers such as apartment and condominium dwellers-who could get wireline service if they were willing to wait long enough-to buy a cellular phone and use it instead of traditional phone service.
It also has meant subtle changes in the way business is conducted. “Here in Venezuela, it’s very common to see your cellular phone [number on] a business card, for example,” commented Ohep. “That’s not as useful in other countries where the calling party pays is not established.”
Colombia
In Colombia, calling party pays implementation was part of the licensing process and has been available since the start of cellular service in July 1994.
In addition to benefits such as attractiveness to customers and increased airtime, implementing calling party pays has allowed new products and services.
CelluBeeper service, introduced by Celumovil in August 1995, provides customers a cellular phone that can receive calls only and cannot initiate them. This allows a business, for example, to maintain communications with employees without worrying about those same employees incurring unwanted charges from personal phone calls.
“BellSouth’s studies indicate that penetration rates can raise from 1 percent to 6 percent in the next five years by introducing calling party pays.”
“That would only be possible in a calling party pays system because obviously if you press the send button to receive a call in a normal type cellular system, then by definition you’d incur the charge,” Murray explained. “That’s a big difference. It has been an enormously popular program that now the other cellular operators in Colombia have also copied.”
The experience of Celumovil with calling party pays, while it has been positive, has not been without a few problems-for example, working out the format on bills for long-distance carriers.
These issues are being resolved, however, and it’s clear Colombia will remain with a calling party pays system.
Chile
The current system in Chile, which has one of the most advanced telecommunications systems in Latin America, is still “subscriber pays.” Although the carriers have been in negotiations about the pricing structure, they have been unable to come up with an agreement to implement calling party pays. But that soon will change.
The government has mandated that before any personal communications services licensees are granted, a calling party pays agreement between all carriers has to be in place. This is something the cellular carriers in Chile say they desire for some very sound business reasons.
“BellSouth’s studies indicate that penetration rates can raise from 1 percent to 6 percent in the next five years by introducing calling party pays,” said Jorge Bascur, general manager for BellSouth Comunicaciones S.A., the largest cellular carrier in Chile.
While implementing calling party pays is expected to increase cellular use in Chile, BellSouth research indicates that wireline users see some good in it as well because callers can reach people easier by knowing the number for their cellular phone, which subscribers probably carry with them most of the time.
“They perceive a benefit in this alternative that allows them to call and reach cellular networks according to their needs,” noted Bascur. “Up to now, cellular customers are not interested in informing openly about their cellular numbers.”
Hank Hogan is a freelance technology writer based in Austin, Texas.
