Starscriber is a San Diego based startup that has solved a problem the world’s biggest mobile telecoms have not: how to monetize the one billion prepaid mobile users that run out of credits to call or text on a daily basis (20 percent of all mobile users worldwide).
Its product, Please CallMe, allows these users to request calls from their contacts for free without taxing the carrier’s voice network.
The company activated its pilot deployment on Nigeria’s Starcomms network in November 2011. Today they announced the launch of a similar program in Chile in partnership with billionaire Carlos Slim’s CLARO network.
Prior to Please CallMe, these creditless users have used a technique called “flashing” which involves placing a call, allowing it to ring once, and then immediately hanging up prior to being connected. This action signals the recipient to call back. It’s become socially ingrained in emerging markets as a third form of communication after calling and texting.
For carriers, this traffic is unbillable but uses valuable voice network resources nonetheless. Worse, in many markets it happens as frequently as 30 percent of all calls. As mobile phones expand further into lower income markets, the phenomenon is expected to worsen dramatically.
“Avoiding spending money is a human pastime,” says Starscriber CEO Ryan Jones. “Free is always better than low cost.”
Jones described a story from Brazil that illustrates the lengths to which consumers will go to avoid paying for mobile phone service. Looking to combat flashing, a Brazilian network operator offered a promotion which made the first five seconds of each call free. The operator then tracked a couple which had a 45 minute conversation, five seconds at a time.
“The lengths people go to to duct tape together a solution for themselves is staggering,” says Jones.
It’s no surprise then that users are thrilled to use Please CallMe. In Nigeria, Starscriber quickly saw 40-50 percent adoption of its service with no advertising. The average user now utilizes the service two to three times daily.
The company attracts customers by simply sending a text notification at the time of flashing and inviting them to use Please CallMe for free. Once a user opts in, the technology recognizes intentionally dropped calls and automatically sends the recipient an ad-supported message inviting a call back.
For users this is a faster and lower risk proposition than flashing. For operators, this reduces network load and generates additional voice revenue as well as a previously unavailable advertising revenue.
Starscriber has yet to finalize its monetization strategy, although it has many options in addition to ads. One of the most promising may be to share in the additional voice call revenue generated for the carrier. Offering more services is likely another.
Starscriber acquired the IP to this technology in 2005 and began developing the commercial applications with the assistance of TRLabs in Calgary, Canada. Its technology is patented and according to Jones is highly defensible.
Starscriber has raised “north of $6 million to date,” according to Jones. The company will likely need additional capitalization, given that he says, “To deploy in a new market, we spend several hundred thousand dollars to go in and ‘pilot the service’ to prove metrics to carriers.”
The company plans to continue this strategy in a few more markets through the end of this year. Jones says its roadmap is generally Africa first, then Latin America, and then Europe.
Starscriber has a big task ahead of it if it wishes to reach the 4.5 billion prepaid users worldwide (75 percent of all mobile phone users). With demand increasing on both the consumer and carrier sides, it would seem they have a realistic shot at pulling it off.