Cellphone Jugglers Seek Best Deals

As cellphone companies in emerging markets reach further down the economic ladder for customers, the providers are struggling with a new kind consumer: the chronic churner.

Some rupiah-pinching subscribers are so price-sensitive that they change their number 20 times a year to take advantage of every little giveaway and discount in this hypercompetitive market. Indonesia's more than 10 cellular companies sell millions of prepaid cellular subscriptions monthly, but nearly as many numbers fall out of use. Such heavy volume of cell numbers tossed after a month or two means volume may be less vibrant than rising subscription figures suggest. That's true not just in Indonesia, but in India and other emerging economies as well. Now cellphone service providers are fighting back, looking to hook customers for longer periods to provide more steady, predictable revenue streams. Churning is most active in markets where many subscribers are on prepaid plans that can be activated by just popping in a new SIM card—the small chips that activate phone numbers and access mobile networks. A card typically doesn't require a new handset or a long contract, and some cost as little as 50 cents apiece. In the developed world, most subscribers pay monthly by usage and often are locked in under multiyear contracts. Churn rates—the percentage of subscribers a phone company loses in a month—average less than 3% in much of the West but can top 10% in markets dominated by prepaid cards.