Why do prepaid packs have 28 days validity and not 1 month?

smartflight

[OP]
Regulars
Aug 19, 2007
82
9
Delhi-NCR
Why do prepaid packs have 28 days validity and not 1 month? Is it due to a TRAI order capping the maximum validity at 28 days or is it simply collusion/norm of the operators to keep it at 28 days?

If it's a TRAI order, what law/order is it? A link would be helpful.
 

SVK

svknet.wordpress.com
Regulars
Jan 19, 2007
9,856
846
svknet.wordpress.com
I did lot of thinking on this matter as well. I came up with this comparison.
Consider there is same plan of Prepaid and Postpaid of Rs 300.
In 1 year, for Prepaid we would have to pay 300 x 13 = 3900. (365 days /28 days = 13 )
For Postpaid it would (300+45) x 12 = 4100, where Rs 45 is service tax at 15%.
Difference between Prepaid and Postpaid is Rs 200 for 1 year.

Now if Prepaid was for 30 days, then people would recharge by 300 x 12 = 3600, so difference would be Rs 500, and more people would opt for Prepaid (at least those like me who do lots of calculations :p).
With higher amounts this difference may go higher, resulting with lower ARPU for operator.
 

smartflight

[OP]
Regulars
Aug 19, 2007
82
9
Delhi-NCR
I understand that. Prepaid users effectively have 13 billing months (slightly more, even) and no additional tax, whereas postpaid users enjoy 12 months but have to pay tax on top of the quoted amounts.

I've been trying to get some info on this for a while, ideally from a legal perspective, but haven't found much.
 


dextermorgan

Regulars
May 12, 2014
7,047
1,258
Hyderabad
I think the main reason is to get more money out of people.

One year has 12 months of vary number of days. So 1 subscriber using 3G will recharge with 12 data packs each year.

By making validity of 28 days, telecos effectively made 13 months (28 days x 13 = 364 days ie 1 year) . So, the same above mentioned customer should have to recharge 13 times instead of 12 times hence more revenue.

IIRC this shady practice was first started by Airtel and then rest of the industry followed