Life Time Incoming Free

Often I wonder what makes lots of these Mobile Phone companies offer “Life Time Free” Sim cards. It is amazing for the consumer to buy a sim card for a price as low as Rs.100 and use that as a incoming phone for Life Time. But is it viable for the Mobile phone operator to offer such products? Very much. It is a highly profitable business. Want to know how – read on:

For instance if you call from BSNL Phone (Caller) to a Airtel Phone (Receiver), you pay a user charge of 50 paise. Of this BSNL has to pay Rs.0.30 Paise to Airtel as “Termination charges”. As a result all Life time prepaid cards would be like cash cow for the concerned companies, since as long as these cards are used, all the incoming calls to these numbers would get them guaranteed cash flow without any default.

(Earlier Inter connect charges were not a botheration since BSNL was the only operator)

This is the reason why all the telephone companies have been showering lots of offers to buy their connection.

Recently TRAI (Telephone Regulatory Authority of India) has made some changes in this charges:

• Local Termination Charges (TC) : reduced from Rs. 0.30/Min to Rs. 0.20/Min.
• International TC’s : hiked from 0.30/Min to 0.40/min
• Transit / Carriage charge has been brought down to 0.15/Min from existing 0.20/Min.

Our Obserations are:

• Reduction in TC is expected to adversely impact all existing GSM operators with large subscriber base (see annexing table), but it is likely to be positive for new entrants.
• Long Distance (International) TC’s are likely to benefit all existing players.
  Outgoing Calls are likely to be cheaper if the operator passed on this benefits to the users.
• Profitability of such companies are likely to take a hit due to dip in revenue.
• Private players due to their aggressiveness and innovations have really captured the Mobile market (see table) Bharti, Rcom and vodafone are operating in more number of circles than BSNL. And they stood to gain in all these IUC business. So next time you hear an advertisement of Life Time Incoming free card, don't feel delighted. After all it is a profitable proposition for telecom operators with highest subscriber base.