Is it fair to treat prepaid customers badly?

A customer who is acquired at zero costs, costs you nearly nothing to service, pays you money in advance and yet who receives minimal customer service. Most businesses would salivate at such a customer. But why do telecom companies focus on their postpaid customers(who take min 1-2months to recover their channel partner commission, who pay late/have credit period, who need expensive payments/collections mechanism etc)? One reason is that postpaid customers, as the conventional wisdom goes, have higher ARPUs than their prepaid peers, and are likely to stay longer on the network.  However, they also cost the telco more for bill delivery, credit costs and customer service. In an era where these costs are almost fully variable, one can tangibly accurately estimate the relative profitability of prepaid and postpaid customers. Just imagine, a prepaid customers costs you nothing to acquire(in direct cost terms), pays his own channel commission(that Rs 1-3 channel fee) and gives you valuable float. He IS rewarded with better tariffs(usually) but that’s owning to competition and not from any benevolence of the telecom operators.

Particulars	Prepaid	Postpaid
Tariffs	L	H
ARPU	L	H
Loyalty	L	H
Customer Service Quality	L	H
Credit Risk to Airtel	L(zero)	H
Customer Acquisition Cost	L(zero)	H
Tariff flexibility	H(RCV)	L(few plans)
Customer payment costs	L(they pay it)	H(Airtel bears it)
Risk of outgoing calls barred due to zero balance	H	L
Bill shock risk	L(balance post every txn)	H(unless daily alerts opted)
MNP Risk	L(may just change SIM)	H(are likely to be pursued by other operators)
Loyalty likely due to	Personal choice	Corporate relationships
Bill Delivery Costs	L(zero)	H(mandatory)
Free Itemized Bill on Email ID	No(same Rs 50 charge)	Yes

How to(and should you) purchase a 3G data card/dongle in India

Having shopped for prepaid dongles in Mumbai and Bangalore, besides having spoken to dealers, distributors and company executives(not just Airtel), I think this post can give some insight and save people money while purchasing data cards.

1. As telecom operators do not have a pan India 3G license, they resorted to reciprocal roaming arrangements where the big3(Airtel, Idea, Vodafone) offer free roaming in data to their subscribers across India. So an operator offering 'free pan India roaming' may not be an USP. But benefit from this if the tariffs in your home state is different from that in the destination state. The arbitrage opportunity could exist nevertheless
2. Negotiate the maximum free usage(and its validity) from your operator. For example, if MTS offers 10GB free for 1mth with data card costing just Rs 999, then others may be prevailed to do so. How it works is that the distributor gets a good commission, and may spend some of that giving you that extra top-up, which may not cost him that much. 
3. Be aware of the lapsation norms of the prepaid data card. You may need to recharge it within a defined period. Longer it is, the better for you in terms of flexibility.
4. Though not strictly legal/ethical, some stores charge Rs 100-200 to 'unlock' the dongle' to use SIMs of other operators, thus allowing subscribers to go with the cheapest plan across operators while still using the same dongle. That increases the churn quotient of the subscriber
5. Remember that promised speeds are indicative and depend hugely on your location. So speeds upto 7.2Mbps may amount to just 2-3Mbps if you are lucky.  So do not spend too much on an operator's plan/prepaid data card before testing the speed in your location. Remember, quality of service/speed are not grounds for a refund under TRAI regulations. 
6. For usage>6GB/9GB,a wifi hub may be cheaper, or even a broadband connection. Explore those options if you are a heavy user. 

Hope this was useful! 

Which is better-prepaid or postpaid voice plan? Analysis for India

The benefits of working for a telecom company is that you get some insight into how the market works. While I do not claim that a month's experience has made me a guru on this(despite what my friends may think!), some useful insights are below. As always, I take resort to the classic MBA answer 'it depends', to point that for each person depending on their circumstances, the conclusion would differ. For data, there is a separate blogpost.

1. Tariffs:-Since prepaid customers(other things remaining equal) are seen as more likely to churn, telecom companies offer them good tariffs, and newcomers try to lure them with great tariff plans. While companies DO reward their loyal postpaid customers, the latter are likely to take postpaid for reasons like company reimbursements, address proof, loyalty and not tariffs, so prepaid seems the winner in this. Prepaid 1-Postpaid 0
2. Customer Service/Billing :-Companies need to retain data for their prepaid customers for a much lesser period than for postpaid customers(due to TRAI billing norms). Hence, CRM analytics, customer segmentation etc becomes easier for postpaid than prepaid. This is not to say that high prepaid spenders don't get differentiated customer service, it is just that companies might not go out of the way to resolve issues for their prepaid base whom they see likely to churn out. And given that getting an itemized bill will cost around Rs 50(ceiling imposed by TRAI), disputing charges or getting waivers becomes much more difficult for prepaid. Also the small fact that in prepaid, your money is at their disposal but in postpaid, your not paying is their bad debt. So once money changes hands, it is more difficult to get it waived or so. Prepaid 0 Postpaid 1
3. Flexibility:-This is really where prepaid scores over postpaid. For example, if you suddenly need to send bulk SMS or make ISD calls in the middle of your billing period, you need to wait for sometime before switching to a better plan, if you are a postpaid customer. But if you are a prepaid customer, just take a top-up/Recharge voucher and you can immediately change your usage pattern. For example, I've made calls to Singapore and USA for hours this month, at a rate of Rs 7.4/minute, but for a Rs 14ISD prepaid voucher, the same calls would have cost me Rs 2.99 only. Ditto for sudden data usage needs etc. Prepaid 1 Postpaid 0
4. Usage based recomendation of best plan:-Though Airtel launched a portal earlier this year giving such recomendations for prepaid users as well, that is not yet an industry practice. As the telecom companies have data usage of their postpaid customers, they can more easily crunch numbers and offer them better plans. Ideal for those customers not savvy enough to hunt better plans from the same telco. Prepaid 0 Postpaid 1
5. Address proofs:-Here, there is no doubt that postpaid is easier. Though one would have utility bills etc, a telecom bill is the easiest address proof to generate in 3months,especially for migrants. Prepaid 0 Postpaid 1

These were the points which I felt crucial to decide between the two. Would welcome your comments. 

Indian Broadcasters Federation rips apart TRAI in its consultation paper response

Handling regulators is a fine art-be it appealing adverse orders, indulging in regulatory capture or responding to draft policies. Judging by its response to the Indian telecom regulator TRAIs proposal to cap advertisement time per clock hour on pay TV channels, the Indian broadcasters federation(IBF) pulls no punches and has gone for the jugular using some very cuastic language. Read the full response here(http://www.trai.gov.in/WriteReadData/ConsultationPaper/Document/Indian%20Broadcasting070412.pdf) but some sample paras indicate the frustration of the writer and leave the reader in no doubt about the angist felt by the association. Whoever the person is, great job done! Just sample some paras

1. not only an attempt of regulatory overeach but also of regulatory oversight
2. ..reflects a basic lack of understanding of the business model of the broadcasting industry
3. We will not attempt to catalogue all the errors in the description...instead..
4. No rationale has been given for the same except the traditional TRAI mechanism of drawing a golden mean between two unrelated figures

the rest of the response is a bit more temperate but on the same lines. If any brave soul wants to respond to regulatory proposals adversely affecting them, the extent of research done here and the caustic remarks here are a role model for use, but not advisable to be repeated given the potential to piss off the regulators, which can affect business in any market, let alone a highly regulated one like India.