The time when my telephone bill was calculated based on the actual airtime consumption have passed. Today, mobile operators price their products in much more sophisticated ways. Mobile tariffs are based on exact statistical data. The products offered are designed in such a way that we can hardly “swallow” them (use the entire airtime), for the price we are still willing to pay.
In the article below, I’ve summarized some of the most frequent terms used by mobile operators and service providers Worldwide.
Prepaid is a way of payment for the mobile airtime and services while the cost of the service is deducted from the existing balance of the user. Prepaid SIM cards are usually sold without contract and have limited time validity e.g. if not used for 90 days, the SIM will be terminated. As there is no contract on the Prepaid offers, the prices for Prepaid mobile products will usually be higher than the Postpaid alternatives.
Postpaid is a way of payment when the bill is paid after the billing period is completed and constitutes a calculation of the acquired mobile services during the previous billing cycle. Postpaid services will be offered under a contract, hence the average price for the postpaid services will be lower.
Pay as you go
Pay as you go or Pay per use – is most simple transparent and simple model, where the customer pays an agreed price per unit (Minute/MB/SMS), based on his actual consumption. Usually, Pay as you go plans will be offered for higher price as the revenues of the service provider based on PAYG model are limited to the markup that mobile service provider adds to the his costs. Most of other models, described in this article, do have the potential option for additional revenues coming from the customer’s under-usage e.g. customer used 65% of 10 GB plan = additional 35% revenue for mobile operator.
Plan (usually monthly) is a fixed amount of Minute/MB/SMS, available within the fixed time period, while the airtime allowance of (Voice/Data/SMS) is renewed in the beginning of each billing cycle e.g. 10GB and 3000 minutes per month.
Bundle is a fixed amount of airtime (Minute/MB/SMS), often but not always limited by certain time period. Once the airtime allowance of bundle is finished, the customer can purchase another bundle.
Pooled or shared plan/bundle is a model where the consumption of each mobile subscriber constitutes a part of a bigger Pooled plan, shared between all the members of the Pool e.g. 100GB Pool shared between 100 members. If 99 members use 25GB than the member number 100 can use all 75 GB .
Pool can be Fixed or Dynamic. Fixed pool contains fixed amount of airtime (Minute/MB/SMS) shared between entire members of the pool, see the example above. Dynamic pool has different structure. Both, the allowance and the usage levels of the dynamic pool constitute the calculation of the usages and the allowances of entire pool members/plans/bundles assigned to this pool e.g. 3 mobile plans of 5GB 7GB and 8GB create data pool of 20GB, if we add to this pool, additional plan of 5GB the pool will grow to 25GB shared between all 4 pool members.
Overage is a term for the cost or the policy (block, traffic speed throttle down), that mobile operator takes, when the user reaches the limit of his airtime allowance. In common practice among mobile operators here are 3 common scenarios for this situation: a) The service will stop, b) higher price will be charged for each unit (Minute/MB/SMS) “outside” the allowed plan c) Internet connection speed will be reduced (Throttle down).
Billing Increment or Billing Step
Mobile service operators bill their customers according to number of units used by the customer. Usually the billing will be based on a common billing units as minutes and megabytes, however in some cased, mobile operators bill their customers based on different increments e.g. 1/10/100 Kilobytes, Seconds etc. In general the customer shall prefer to be billed by the smallest increment however on practice mobile operators will use small increments like seconds and kilobytes in order to camouflage higher prices.
Some operators are more creative than others, for example NTT Docomo uses Packets of 128 bytes to calculate and price internet consumption:
Often, mobile operators use word “Unlimited” to describe big mobile offers, however based on my experience, there is no such a thing as an unlimited plan simply because such a wide definition is too exposed to various fraudulent activities, hence there always will be a small letters that determine the Fair Use Policy (FUP) that limits the “Unlimited” offers.