Mobile Phones: Pay as you Go (Prepay)
Introduction
Of the two main ways of owning a mobile phone, Contract and Prepay; prepay (also known as pay-as-you-go); the prepay option is undoubtedly the most popular worldwide today.
Pay-as-you-go (also known by the acronym PAYG) refers to a mobile telephone usage system where, rather than siging-up for a fixed term contract you buy airtime instead, charge you phone with this airtime and then use the phone until the airtime has gone.
History of Prepaid Mobile Phones
During the late 1980s and early 1990s all mobile phones were only available by signing-up to a fixed-term contract where the user gained the phone at a discounted price but the mobile network operator made their money through the cost of subscription and calls. Then in the mid 1990s Eircell, a mobile operator from Eire (The Republic of Ireland) came up with a novel concept of mobile phone usage as a way to attract new people (those under the age of 18, those without bank accounts and those without proof of identity) as mobile phone users.
The system was fairly simple. The user had to pay IR£99 up-front for a mobile phone handset which came pre-loaded with credit) additional call time could then be purchased as credit when required and used. No call could be made unless the user had sufficient credit for that type of call. Despite the high cost of calls (and the levying of a 7p service charge on each call) the system actually proved to be an amazing success. The system was branded as Ready To Go, a name still used by Vodafone Ireland who now own Eircell.
Eircell's system was so succesful that other operators in many other countries began copying the model. There are now many mobile operators whose operating models depend on pay-as-you-go rather than traditional contracts and in developing countries and regions such as West Africa pre-pay tariffs account for over 90% of all users. However, there has been a backlash against pay-as-you-go users and in the US account phones offer the best features with pay as you go services being far more restricted in functionality. In the UK operators have started raising the minimum topup amount to £10 and raising the price of PAYG phones in an effort to attract users to contract plans. It should still be noted that every operator in Europe offers a pay-as-you-go tarrif. There is also the practice of locking a mobile phone to a single network operator so that if a new SIM card from a different operator is inserted in the phone it simply will not work. This makes it more difficult to buy a cheap second-hand mobile telephone for use with an alternate PAYG operator.
It should also be noted that, in general, pay-as-you-go customers pay more for their calls and SMS messages, and are limited in what they can do with their phone where features such as calls to international or premium rate numbers may be blocked and users may not be able to use their phones internationally (roaming).
This is not to say that mobile phone operators do not offer international roaming; they do. However, providing this functionality is not an easy thing. The problem is that for pay-as-you-go to work billing has to be instantaneous as the cost of the call is deducted from the credit stored within the pone and on the parent network. But the ability to roam internationally with a mobile phone necessitates the free movement from one operator to another but there is no way to instantly bill based on the costs of the second operator.
To overcome this limitation a number of methods have been generated. In the first of these the prepay subscriber dials a 'trigger' number from the foreign location. The home operator then returns the call so that you are paying the cost of the service returning you call and you are then allowed to enter the number of the person you were initially trying to contact.
Another method, which also precludes direct access is to dial a sequence of numbers including access digits to access the home service followed by the roaming number that is desired.
Increasingly, a technology called Customized Application of Mobile Enhanced Logic (CAMEL) which allows direct billing from the home network. This allows the user to direct dial calls in a foreing location whilst simultaneously being accurately charged for the cost of the call.
Certainly, if you are not a heavy user (either voice or text) then despite the cost of the handset and the higher cost of calls the PAYG or prepaid option is probably the most cost-effective for you.