Client-information exchange pays off for mobile operators

Małgorzata Galas, who has been an Era GSM mobile telephone network subscriber for three years, rarely pays her bills on time due to financial problems. "If two monthly bills in a row are unpaid and they send me the third one I know they are going to temporarily turn off my outgoing calls," she said. "But I'm a great client anyway because despite delays I do pay my bills and others don't pay at all." But if Galas decides to switch to either of the other two remaining operators, Idea or Plus, it might not be so easy for her. Last fall all three mobile networks - Polska Telefonia Cyfrowa's (PTC) Era GSM, Centertel's Idea and Polkomtel's Plus GSM - agreed to exchange information about fraudulent subscribers in order to crack down on unpaid bills, which cost networks about zł. 60 million ($14.3 million) per month during each of the past two years.

Getting tough Under last year's agreement, all new customers who buy a cellular telephone during a promotion agree to allow other mobile networks access to their data. If they disagree, they can still join the network but only if they pay a zł. 760 deposit or purchase the telephone under a pre-paid scheme. According to Marek Woźniak, director of PTC's payment department, the new regulations have already cut down on losses from unpaid bills and discouraged people from trying to acquire telephones during promotions and sell them for a profit on the black market. "We expect that thanks to the changes introduced last year (all three operators) will be able to save up to zł. 200 million ($47.6 million) by the end of 2002," Woźniak said. "Since the introduction of stricter regulations last fall, the number of fraudulent clients who try to swindle telephones has dropped three-fold and each operator every day rejects at least 200 potential new clients who have unpaid bills at other mobile networks." In 2001, PTC filed 7,000 cases against fraudulent subscribers but in the first quarter of this year the number fell to 4,000, Woźniak said. "We expect the number will go down further to some 2,500 per month," he said. "And we are only starting to benefit from stricter regulations." Last year, PTC's losses due to unpaid bills hit 4% of its yearly revenue but in the first quarter this year the figure dropped to 1.6%. Last year, PTC earned zł. 4.3 billion ($1.02 billion) in revenue from 3.8 million subscribers.

Beware the free roamer According to Leszek Kamiński, spokesman for Idea, there are still other ways to prevent fraud. "We ask for a deposit if one of our clients applies for the so-called roaming (international) services," he said. "And we also ask for a down payment if someone's bills unexpectedly increase to an unusual level." Already this year, Idea has attracted 200,000 new subscribers for a total of 3.64 million clients. But unpaid bills remain a serious problem. Idea said it has lost 4-5% of its revenue during the past three years due to fraudulent activity. "Unfortunately, the number of payment problems grows as we start serving clients with lower purchasing power," Kamiński said. "Such clients, who usually earn less than our traditional clients, are tempted by low promotion prices and are not always prepared to pay a monthly subscription fee." In the last quarter of 2000, the three operators sold 1.3 million mobile phones combined. "On the other hand, we are also doing our homework and we can now better assess our clients before they sign contracts," Kamiński said.

More work to be done Meanwhile, the Economy Ministry is working on a draft bill for the exchange of commercial information that would make it easier for companies to comply with data protection laws. Under the new law they would be able to process fraudulent client data without the clients' written approval. "Under the data protection law, data processing regulated by other legal acts is acceptable," said Małgorzata Kałużyńska, spokeswoman for the Office of the Data Protection Registrar. "So if the commercial information exchange is regulated by the new law, there is no reason why such commercial data cannot be processed."