“Loaded” State

I am really amazed at how people (Filipinos most especially) find ways to get by. Always ready to play the hand they get.

The “Tingi” System (or Per Piece System) thrives in a country like the Philippines because products compete for “pocket share”. Or, a share for every P1.00 budget.

Every peso counts, and for every such peso, certain percentage assignments go to buying food, toiletry needs, cigarettes, etc, etc, and, of course, prepaid mobile phone load.

I once heard the story about the meeting between Smart’s President, Napoleon Nazareno, and Microsoft Chairman, Bill Gates, when the former went to Redmond some years back. Fascinated by Smart’s success (and profitability) in offering P1.00 per SMS message, Bill Gates asked Mr. Nazareno how they did it? The answer… “Sachet Marketing”. Gates paused… stared right at Nazareno, then slowly tapped his fingers on the table while repeating the two words… “Sachet Marketing?” … “Sachet Marketing…” “Hmmm…”

You can bet that Bill Gates’s mind was churning up ideas at that moment.

Well, he need not put it to the test. He only needs to look at our vibrant mobile phone market (though subscriber uptake is tapering, and soon enough, SMS usage growth) and see that it can be done. That out of “sachet-size” servings, a company can build a growth platform for its business, and profitability earn from the bottom of the pyramid — a phrase creatively coined by CK Prahalad in this remarkable book.

In fact, the SMS business in this part of the world has gone so BIG, so GARGANTUAN, that a lot of telco pundits have considered the Philippines as the SMS capital of the world (read: 200 million SMS messages a day, and this is the oft-quoted data in 2005. Quite sure it’s more than 200 million a day, nowadays).

To give us the proper perspective… a country with around 85 million people, half of which, around 40 Million, send out those 200 million texts a day (that’s 5 per individual on average). Fact is, around 90% of all mobile subscribers in the Philippines (that’s about 36 million) are prepaid accounts. This user base, coupled with the prolific nature of SMS usage, is fertile ground, a veritable culture dish, for dentifying new sets of economic application for the SMS business.

The monetization of prepaid load has already taken root. I personally experienced it when I went out to eat in one of the “Jolli-jeeps” (a food stall along side streets) in Makati. I was curious and had to ask the proprietress if she will accept prepaid load as payment. Happily she answered, “Yes, Sir!”. Thing was, I could only pass a load to someone on the same telco network. I am on Globe. She was on Smart. Too bad. (A classic “walled garden” approach).

Another instance. While waiting for my turn to pay at a convenience store counter, I overheard two individuals talking about someone who was willing to accept a P200 load as payment for her services (will not mention what type of service this was, lest we be reprimanded by the board of censors). The guy in question was fortunate. They were both on the same telco network. Hmmm… payment via load is now accepted practice…

We may not know when this payment method actually started and on what level such option has gained market acceptance. This is below our radar sights (at least for me), and can only hope to see it in action if we immerse ourselves in the economic sphere of interaction of these prepaid users.

If we can only make things happen by opening up the world of commerce to this prepaid market segment by formally legitimizing the use of prepaid as currency, and then slowly allowing monetized load to be accepted by all users, regardless of telco network.

Payment by load has, of course, its limits. It may be best used for P2P (Person-to-Person) transactions among prepaid users, or even for B2C (Business-to-Consumer) and vice versa at the most basic level.

But, let us think of the consequence, the impact on airtime usage, the impact on grassroots economy, for a moment.


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