Hacker News Reader

Comment by pan69 | Hacker News Reader

I have a pre-paid Telstra device here in Australia. I hardly use my phone so it makes sense, right? I cannot buy credit less than $20, which I'm OK with however, this credit "expires" if I don't use it within a certain time frame. As if pre-paid credit goes stale... If I've run out of credit and I haven't topped up my account within a certain amount time, I will receive and SMS that they're going to cancel my account.

View on HN

In Portugal most people have prepaid cellphones, you can get the same kinds (all the recent high end smartphones etc) as with a contract and most prepaid credit plans don't expire.

Prepaid services vary widely depending on the country you're in. In some places, the credit is valid for a quite short amount of time. In France, the validity of my credit depends on the amount I charge. So I had to make some crazy calculations to choose between putting around $10 that will be valid 15 days, or $25 valid one month, etc.

On the other hand, I'm in Sweden now. My phone bill for the whole year has been below $100 (I don't phone much, but I use internet a lot). So, "pre-paid" can mean a lot of different things.

Free in France is now selling a monthly subscription you can quit anytime (no contract, no subvention for the phone, just like the typical prepaid stuff) that gives you both unlimited voice calls and unlimited data and sms for only 20 euros. 16 euros instead of 20 if you're also subscribed to their ISP.

And for those who don't really have a need for cell phones beyond the basics, they have an offer at 2 euros a month for 1 hour of voice time and 60 SMS. Even better, it's free as in beer (0 euros) if you have chosen Free as your ISP. http://www.free.fr/adsl/index.html

You'd really have to be bad at math to chose an expensive contract nowadays over paying in full for your own phone and getting that kind of plan.

This makes me practically foam at the mouth. "Pre-paid" that expires a month or two after you purchase it, isn't. It is merely paying month-to-month. Pre-paid should not expire for a reasonable time-frame (at least a year, if ever), regardless of how much you've purchased -- just like international calling cards.

It depends on how the expiration works. I think tracfone's policy is fair. As long as you don't run out of service days your minutes will never expire, and you can get three months of them for $20.

I was going to mention TracFone as a good example, actually -- but I looked at their website and saw that they had the "service days" limitation that you mention. IIRC they used to have an even better policy than that, more in line with what I described.

Really? All I know about TracFone policy changes is that service days used to expire so you were forced to buy a card every 3 months instead of stocking up. But they changed that.

Either way it doesn't make sense to charge $0 for a phone to consume resources by having a constant connection to cell phone towers and reserving a number. $7 is pretty cheap so I hope it's a fair price compared to actual costs.

Here in Portugal they're like that nowadays; I think you still have to make a phone call every month or so, but I imagine that's to cut down on abandoned phones.

That said, I can't imagine the carriers being too happy about having clients like me, who only charge the phone with $10 every three months ;)

So, here's why that happens.

There are typically two phone-minute charging models: "Calling party pays" (Eurozone, others) and "Both sides pay" (US, Australia(?)).

In a "both sides pay" scenario, each customer pays for their own side of a call. I call your mobile from my mobile, we're each charged a minute per minute.

In a "calling party pays" scenario, the person who calls pays for both sides of the call. You can tell when this is happening by whether there are different rates for calling landlines vs. mobile phones.

The important thing here is what this means for pre-paid services.

In a "calling party pays" situation, a mobile subscriber can continue to make money for the telco _just by leaving their phone turned on_, regardless of whether they can make outbound calls. The inbound caller will still be giving money to the pre-paid caller's telco.

With "both sides pay", the telco of the pre-paid customer receives all revenue up-front; there's no subsequent money to be made because all charges come out of the credit balance of the pre-paid customer. Between that, and revenue recognition rules, it makes sense to expire that credit every 1-2 months because there's no other way to get a revenue stream off that customer.

Reply on news.ycombinator.com