Jio’s entry made distruption in Telecom Market

Until 2016, most of the telecom companies use to offer lower calling rate per minute along with unlimited internet plans to consumers with a postpaid corporate plan. On an average, operators use to provide 1.5 GB 3G data for one month at the cost of Rs.295 along with 500 local calling minutes and 500 text messages. After consuming 1.5 GB data, customers use to get unlimited 2G data at 64 KBPS speed. Operators also offered free calling between numbers on the same network.  Some networks also allowed customers to carry forward their remaining data balance in the next month.

Unlimited plans made users more inclined towards prepaid

But, due Jio’s entry in September 2016, all these plans became irrelevant. These days, thanks to Jio, almost all operators offer 1 GB daily internet allowance with unlimited calls (as per fair usage policy) and 100 text messages per day at the price of around Rs. 150 (prepaid recharge) with 28 days validity.

(Airtel offers daily 1GB data, 100 text messages and unlimited local, STD, roaming calling for 28 days on prepaid recharge of Rs. 149. Vodafone offers similar benefits on its Rs. 159 recharge, while Jio’s Rs. 149 recharge provides 1.5 GB daily data along with unlimited calling and 100 text messages.)

So, postpaid plans have nothing extraordinary to offer for consumers. But, such postpaid connections provide recurring revenue to telecom operators. So, telecom operators try to lure more customers into a postpaid “trap” by offering free handset insurance and data allowance rollover option.

Postpaid users often feel cheated due to additional taxes, fees

This may sound unbelievable, but call rates applicable to postpaid customers are usually on the higher side compared to those charged to prepaid consumers. For example, if Airtel postpaid customer calls a number starting with 18602 (numbers for banks, courier service, insurance, etc.), he or she would be charged Rs. 1 per minute. On the other hand, prepaid customers are charged Rs. 0.1 paise per second to call on the same number. Jio customers can make these calls for free.

Also, postpaid customers need to pay additional charges in the form of GST, cess, etc. on their overall bill amount every month. Postpaid consumers end up paying more charges for outgoing calls made while in roaming mode as well.

Consumers are often misled by telecom companies when it comes to explaining plan details for postpaid connection. Tariff for data, text messages and calls while in roaming, call rates for 18602 numbers, unauthorized charges related to value-added services are three of the most common issues faced by users. You can easily find several frustrated customers visiting telecom operators’ stores to get a refund for VAS charges applied to their bill every month.

Why are postpaid customers important for telecom companies?

Postpaid customers create a revenue stream that is stable and predictable every month. This is called recurring revenue.

Believe it or not, some postpaid customers do not even read their monthly bill and have set up a direct debit. So, the telecom company directly debits the monthly bill out of customer’s bank account. Companies make a lot of money from such customers who do not prefer to read the fine print.

This is the reason; top networks urge new customers to go for a postpaid connection. Converting a prepaid number into a postpaid one is extremely easy and can be done online as well. On the other hand, converting a postpaid number into prepaid is a problematic procedure. It cannot be done online, and customer needs to visit a physical store, fill up a form and wait for 48 hours. Store executives often try to get rid of such customers by merely saying that are out of postpaid to prepaid forms.

Postpaid connection users are under contractual obligation

After signing up for a monthly pay connection, the customer remains under a contractual obligation to pay the bill issued by telecom operator every month. In case of non-payment of the monthly bill, the operator charges late fees of (up to Rs. 100) and also takes legal action against the customer.

In case if the dues are not paid within a specific time-frame, the telecom operator may send a notice through its lawyer and approach the court to file a suit against the customer.

People in the US and the UK prefer to opt for pay monthly than prepaid

In countries like the US and the UK, people prefer to use a postpaid connection as handsets are sold in installments as part of the monthly pay bundle. That’s not the case in India. Such offers are limited and exist only for high-end handsets.

Since the arrival of Jio, going for postpaid plans does not make much of a sense.

On the other hand, most of the prepaid customers recharge as and when required throughout the month.  Prepaid plans allow you to keep complete control on your monthly expenditure on your phone. You can simply choose recharge pack with unlimited data, calling every month without worrying about unauthorized charges or fees.

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