The Future of Flash Calling
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It is estimated that up to 50% of all cell phone calls made in emerging markets are flashes; a call intentionally ended before it can be picked up, pinging the recipient that they want to talk without using minutes.
Think of it like purposefully pocket-dialing someone… and it's done 8 billion times a day!
These calls are so common they have made it into the local languages of places like Nigeria ('flashing') and the Philippines, "miskol", functioning as both a noun and a verb. For those on a prepaid or unlimited usage plan, this must seem silly. But 75% of people in emerging markets are on pay-as-you-go plans with a cheap phone. At any one time more than 1 billion of them have no more credits/minutes to burn.
But, they’re still able to connect to the GSM/CDMA network so they can initiate a call but that’s it and at any one time there are more than 1 billion of them in the world.
I get flashed all the time here in Vietnam. Depending on the person, it means “Call me back,” or “I’ve arrived safely.” Mobile communication is so powerful an invention that even in a country where the median daily wage is $4, a phone is one of the first things people acquire when they save any money.
The communications industry in Vietnam is at an interesting crossroads right now with a number of technologies, like 4g and cloud computing, in various stages of deployment and the market. Access to it for foreign investors, however, is poor as the Market Vectors Vietnam Index Fund (NYSEMKT: VNM) has almost zero exposure to the sector.
FPT , the biggest publicly-traded telecommunications company in Vietnam, is growing rapidly in both telecommunications and software services. Their extremely high margins in information services and software have the company guiding 30% growth in 2012. The stock is up 25.6% year-to-date. Given that their software outsourcing business (www.fpt-soft.com) is the market leader and their recent long-term partnership with Microsoft (NASDAQ: MSFT) to extend their products into the 'cloud,' they look to be dominating this space for the foreseeable future.
Moreover, FPT Telecom has overtaken Viettel in broadband market share at 11.2% owning the fiber-optic to the home market. Wi-Fi is everywhere here and so much business is done in coffee shops because of it.
The person who solves the problem of flashing, turning it from an exploit to a feature of cell phone service, regardless of the balance on one's account, is going to make a killing. Some of the current solutions involve sending ad-supported messages to both parties to the call, maker and receiver. I'm sure more will emerge through time and the market will duke it out. It might even become the path to free texting plans, or at least lower cost unlimited texting plans. As Wi-Fi enabled phones move toward the entry-level we may have our disruptive solution. Moving the flash calling market, even incrementally, onto the wired network backbone and off the mobile broadband network would be a win for everyone.
With cell phone subscription rates continuing to rise as populous frontier markets elevate their living standards and communications costs continue to drop, this is a problem definitely in search of a solution and not the other way around.
Peter Pham has no positions in the stocks mentioned above. The Motley Fool owns shares of Microsoft. Motley Fool newsletter services recommend Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. If you have questions about this post or the Fool’s blog network, click here for information.