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AT&T’s prepaid mobile phone division is one of the largest in the country and services roughly 20 – 30 million subscribers annually. One of the problems though with utilizing this particular service provider is the fact that “topping up” (the act of adding prepaid phone credits to a phone) is at times an arduous process due to the inherent deficiencies in the automated system (Hempel, 2005).
As indicated by consumer surveys which examined the overall usability of the automated system, consumers state that it was at times difficult to navigate the intricacies in the system especially when taking into consideration the numerous security features that AT&T has put in place (Lee & BradLow, 2011).
The Go-Phone (the brand name of the prepaid phones used) automated system at times asks users to enter in a 4 digit pass code before they are able to access several features of the service which includes the ability to add phone credits onto the account (Report: Interest Surges With New Go-Phone, 2003).
Unfortunately, as seen through internal studies within AT&T’s own prepaid phone division, it was noted that consumers kept on calling customer service since they constantly forgot the pass code to their phone (Lee & BradLow, 2011).
This then results in a long process of verification where the representative asks the caller to provide some form of verification on the account aside from the pass code which can consist of either the last 3 numbers called, when was the last time they added phone credits to the account or when they created the account in the first place.
In total, when combining the amount of time to call the automated system, getting rejected since they didn’t have the proper pass code, having to call customer service in order to get the pass code reset, waiting to reach a representative, verifying the account the holder, resetting the pass code and verifying the reset pass code the entire process could take up to 30 minutes or more depending on how many other consumers are calling at the same time.
While it may be true that current Go-Phone models do have installed tools wherein new pass codes can be requested by consumers the problem still continues to plague the system (Report: Interest Surges With New Go-Phone, 2003).
Upon further investigation, it was discovered by AT&T that a large percentage of their consumer base cannot be considered “phone literate” in that they did not know how to utilize the more technical menus available in their phone (Lee & BradLow, 2011). This of course presents itself as a problem since this creates higher wait times to speak to a representative in order to resolve the issue which would necessitate AT&T having to hire more representatives in order to handle the increased number of callers.
The solution seems simple enough, change the automated system in order to remove the need for consumers to enter in the pass code for their phones. Unfortunately, there are several problems when removing the pass code system: for one, the reason pass codes are there is to prevent other people from using a consumer’s AT&T account to make unwarranted purchases.
What must be understood is that AT&T not only allows consumers to add money onto their accounts utilizing the automated system but it also allows them to make small purchases on the AT&T store. This can constitute various ringtone, games, multimedia and other downloadable content A malicious user could utilize a system without a pass code in order to buy a lot of useless downloadable content onto a user’s phone in order to drain that individual’s prepaid account balance.
Also, a person could do it themselves and call AT&T stating that someone maliciously accessed their account and as such AT&T would have no choice but to credit the charges back to the customer and remove the content from the their phone which essentially gives that individual a few days of free content usage.
Another factor to take into consideration is the fact that AT&T does offer customers the ability to either change their number or transfer their number from one SIM card to another. The pass code system prevents any malicious user from transferring numbers from one phone to another in order to cause grief to the original user.
One possible alternative solution is to merely remove the pass code system when adding prepaid credits onto an account. This particular method would of course make it far more convenient for consumers to add phone credits onto their account without having to go through the arduous process of having to remember to reset their pass code.
The reason why this particular solution hasn’t been implemented on all AT&T Go-Phone cards lies in the fact that one of the methods utilized for account verification is stating when was the last time phone credits was added onto an account. A malicious user could buy a cheap AT&T Go-Phone card, add it onto an account and take complete control of a person’s AT&T account through that process of verification. It is due to this that the pass code system is necessary in order to prevent cases of account theft from occurring (Silva, 2008).
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On the other hand this doesn’t resolve the issue at all; a large percentage of AT&T’s consumer market is still stuck with utilizing a system that has them undergo an arduous verification process just to add money onto an account.
While there are alternative solutions to this problem such as buying a reusable AT&T charge card from Target or using AT&T’s automatic billing system which utilizes the Vesta payment system to charge people on a monthly basis using their credit cards or checking accounts the fact remains that such methods are for people with marginal to medium income rates.
As seen by internal studies by the company it was shown that consumers that had the hardest time in dealing with adding phone credits using the automatic system were individuals that were part of low income demographics of American society.
This consisted of various mixes of demographics consisting of minorities, the uneducated, the poor etc. While this paper is not trying to indicate that just because an individual is poor means that they are uneducated and would have a hard time using the system the fact remains that evidence from AT&T’s own investigations showed that this was the case.
These particular individuals usually buy cards of the lowest denomination for their prepaid phones and as such buy more prepaid cards and utilize the system more on a daily basis as compared to consumers that are able to afford higher denomination cards or have credit cards that can be used in the Vesta automatic payment procedure (Hempel, 2005).
This represents a problem for the company since one of the largest consumers of their prepaid phone service is having the most trouble with the system which puts a strain on company’s call center representatives who should be assisting more consumers rather than dealing with calls that involve adding money onto an account that should have been taken care of by the automated system.
While AT&T does give users the option of calling in and using their credit card to add money onto an account without having to use a pass code the fact remains that not all members of low income demographics have credit cards or the money to accomplish such a transaction (Palenchar, 2003).
What is necessary is to implement an alternative service to consumers that allows them to add in phone credits onto their account in a safe and secure way without having to go through the arduous task of having to utilize the automated system. Such a system needs to be convenient so that even the most inept of consumers can easily use it while at the same time it must be secure so as to ensure that no malicious users would be able to get into an individuals personal account (Silva, 2008).
AT&T did try to attempt something similar through the use of an online transaction system or refillable cards that could be bought at several shops but these did not go over so well with the demographic that was being targeted. What must also be understood is that AT&T cannot make phone credit transactions more convenient for one consumer segment while at the same time exposing its other segment to potential security risks.
One of the major problems in the U.S. at the present is the potential for identity theft and as such if a person were to steal another person’s phone number through a fraudulent transaction then AT&T could be considered liable for exposing its customers to such dangers. It is based on this that AT&T finds itself in a predicament that requires both security and convenience yet creating such a solution with two opposing factors is difficult to say the least.
One way of resolving this predicament is by utilizing the Smart Credit system developed by my company. This particular system was inspired by the E-load and Auto-load technologies seen in the Philippines which is considered the texting capital of the world with an estimated 1.39 billion texts sent every year from a subscriber base of only 72 million users.
The E-load and Auto-load systems utilized by Philippine based telecommunication companies (Globe, Smart, Sun, Touch Mobile, and Red Mobile) allows registered vendors to sell prepaid phone credits from their user accounts in exchange for 1 percent of generated income per transaction. The payments for all transactions are thus forwarded to the mobile providers at the end of the month and the payments for services rendered are deposited in the user’s bank account.
This particular system resulted in a proliferation of prepaid mobile credit vendors in corner stores, shopping malls, groceries, supermarkets etc. Basically any public location possessed a prepaid credit vending stall that could process mobile credit purchases quickly, effectively, and of course cheaply since users could pick from low to high variables.
All transactions are subsequently recorded by the automated system and vendors are required to provide receipts and records for all transactions to ensure that no problems regarding misuse occur. This particular system has proven itself to be an effective platform for selling prepaid phone credits since telecommunication companies located within the Philippines have even begun to scale back their production of prepaid cards in favor of utilizing this electronic loading system.
One of the inherent costs with creating a prepaid card is the system utilized for creating the security codes hidden at the back of each card. The production, distribution and sale of such prepaid cards actually constitutes a considerable level of cost for companies such as AT&T especially when taking into consideration the sheer amount of fraudsters and scam artists trying to “hack the system” by entering strings of numbers hoping to come across a number combination that would actually be legitimate.
The electronic load system gets around this by automatically crediting a customers account through an electronic confirmation rather than a security confirmation code.
All the customer has to do is provide their number, pay for the transaction with the sales representative and the confirmation code can be sent to AT&T’s system in order for the amount to be automatically credited to the customers account.
Since consumers don’t have to deal with the automated system nor will they need to provide a pass code this would make it far easier for consumers to make payments for prepaid phone credits. Not only that, since the auto-load system can be placed on nearly any type of phone small businesses can become prepaid top up kiosks where any consumer can come and add money onto their prepaid mobile device.
What the Company Will Provide
The solution my company will provide comes in the form of utilizing our proprietary Smart Credit system as a way for AT&T to distribute its own brand of electronic top-ups.
My company will conduct market research across all states and regions within the U.S. and identify which particular towns and cities would benefit the most from utilizing this particular system. After this research has been accomplished we will conduct, in conjunction with AT&T, product testing procedures in select towns and cities to determine consumer responses to the use of the system.
Should consumer responses prove to be positive, these areas will be selected as the initial markets where the product will be distributed. Initial distribution will consist of targeting corporate retail establishments such as Wal-Mart, Walgreens, Costco, Whole Foods etc. Basically any establishment that has a lot of consumer traffic and can be considered marginally secure for the initial test run.
It is expected that the initial launch will be successful both due to the convenience the service provides and the fact that it enables consumers to buy phone credits in places where they normally shop thus making in easier for them. Once the initial launch utilizing corporate partnerships becomes successful the next phase of the procedure will involve marketing to smaller stores and individual consumers as a means of generating extra income.
It is expected that the future proliferation of the Smart Credit system will enable AT&T to cut back on its production of prepaid cards as seen in the case of the Philippines. By utilizing this particular process not only will it save AT&T money in the long run but will help to create a network of buying stations that would enable it’s consumers in nearly any town or state to conveniently and securely add phone credits onto their account.
Anticipated Problems in Implementation
It is assumed that there will be hurdles in initial implementation of the Smart Credit system due to the fact that what AT&T is essentially doing is granting users the ability to give out phone credits directly from AT&T’s system.
There are numerous possibilities for malicious use ranging from crediting more money than what was given, crediting when no money was given at all or utilizing the system as a means of unlimited phone credit access. It is due to this that only major businesses will be given full unlimited access to the prepaid credit system while individual or small businesses will have a set limit to the amount they can sell per day.
Also, new policies need to be implemented regarding the systems use such as reporting immediately when the phone where the Smart Credit system is present is stolen. Reports not filed within a given working day will result in the person who lost the phone being liable for the amount of credits transferred despite no money being given. This procedure is to discourage attempts at trying to trick AT&T into repeatedly issuing new Smart Credit systems despite the phone not really being stolen in the first place.
Limitations and Issues to Smart Credit Usage
What must be understood is that the Smart Credit system will work within AT&T’s current phone credit architecture and as such will come with the same limitations as normal credits utilized by consumers. This means that the phone credits will also come with an expiry date similar to what is present in the other prepaid payment systems however roll over minutes will also apply to this particular system.
Another factor to take into consideration is the limits of AT&T’s current prepaid network and how certain areas are not serviceable by AT&T prepaid. While it may be true that the Smart Credit system can spread rather easily through individual consumers and businesses the fact remains that since AT&T doesn’t service all areas there are certain areas which the Smart Credit system isn’t viable.
Not only that, areas with few AT&T clients cannot be considered viable locations for such a system since too few consumers within a particular area is indicative of the location being controlled by another telecommunications company.
Lastly, there are issues regarding how Smart Credit prepaid credits stack with the roll over minutes already present within a phone that have been added on through some other means. It is anticipated that new policies or means of conversion will be necessary in this particular case in order to prevent any discrepancies or consumer complaints in the future.
Positive Results of the Smart Credit System
When examining the case of the Philippines it can be seen that the effects of their auto-load or e-load systems has in effect made it far easier for the average consumer to conduct prepaid transactions from nearly any public area within the Philippines.
If such a system were to be implemented within the U.S. it is anticipated that AT&T’s market share of the prepaid market will increase as a direct result of the greater convenience provided by such a system. It must also be noted that within the past few years there has been an increased demand for AT&T’s discontinued $4.99 and $9.99 prepaid cards which many low income consumers bought due to their relatively low price.
The reason why such cards were discontinued was due to the fact that their original purpose was for prepaid consumers to buy texting and internet browsing packages however they were instead used for AT&T’s $1 a day unlimited calling feature (Hempel, 2005).
Not only that, the sale of such cards was determined by AT&T corporate management as not being cost effective in the long run and as such they were subsequently discontinued. With the Smart Credit system AT&T can bring back the old denominations that low income consumers are looking for and as such enable them to communicate affordably with their friends and family despite their low income.
Based on the presented data in this paper it can be seen that not only would the Smart Card system benefit AT&T and resolve the issues inherent in adding in phone credits with the automated system but it also presents new market opportunities that can be explored.
The greater convenience afforded to consumers as well as the possible proliferation of AT&T Smart Credit stores would enable the company to penetrate markets that it wasn’t able to do before and grow its market share. While it may be true that there may be a few initial problems early on it is anticipated that the use of such a system would create more benefits rather than inconveniences for AT&T.
Hempel, J. (2005). Prepaid Cell Plans Sound Better. Businessweek, (3947), 90.
Lee, T., & BradLow, E. (2011). Automated Marketing Research Using Online Customer Reviews. Journal Of Marketing Research (JMR), 48(5), 881-894.
Palenchar, J. (2003). AT&T Tries Prepaid Without Pain. TWICE: This Week In Consumer Electronics, 18(11), 34.
Report: Interest Surges With New GoPhone. (2003). Wireless Week, 9(16), 18.
Silva, J. (2008). TracFone racks up another win against cellphone hackers. RCR Wireless News, 27(6), 15.